Insider Weekends – February 11, 2011

Welcome to edition thirty six of Insider Weekends. Insider buying nearly tripled last week with insiders purchasing $47.89 million of their stock when compared to $17.19 million in the week prior. This jump in insider buying was largely driven by the big News Corp. purchase discussed below. Selling also increased significantly with insiders selling $1.83 billion worth of stock when compared to $1.07 billion in the week prior.

Sell/Buy Ratio:

The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider buying in that week. The adjusted ratio for last week dropped to 38.24. In other words, insiders sold more than 38 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 62.5. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Note: As mentioned in the first post in this series Introduction to Insider Weekends, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. News Corp. (NWS): $18.33

Chairman and CEO Rupert Murdoch acquired 1.2 million shares of this media company, paying $16.81 per share for a total amount of $20.17 million.

This is the biggest purchase by an insider of a company following the $100 million purchase by Michael Dell in December. You can see the list of recent insider transactions for News Corp here.

2. RLI Corp. (RLI): $56.15

Shares of this property & casualty insurance company were acquired by 3 insiders:

• Director Gerald D. Stephens acquired 13,140 shares, paying $55.40 per share for a total amount of $727,907.
• Vice President & General Counsel Daniel O. Kennedy acquired 2,835 shares, paying $55.80 per share for a total amount of $158,180. Mr. Kennedy increased his stake by 111.92% to 5,368 shares with this purchase.
• Treasurer John E. Robison acquired 250 shares, paying $55.75 per share for a total amount of $13,937. Mr. Robison increased his stake by 11.62% to 2,401 shares with this purchase.

This is the third week in a row RLI has made our list with four different insiders picking up shares over the last three weeks. You can see the list of recent insider transactions for RLI Corp here.

3. Flowers Foods, Inc. (FLO): $24.83

Director Benjamin H. Griswold IV acquired 25,000 shares of this bakery products company, paying $24.56 per share for a total amount of $614,082. Mr. Griswold increased his stake by 36.57% to 93,371 shares with this purchase.

You can view the list of recent insider transactions for Flowers Foods here.

Voluntary Disclosure: I have a long position in Flowers Foods in my trading portfolio.

4. Convergys Corporation (CVG): $14.24

Director Ronald L. Nelson acquired 30,000 shares of this business software & services company, paying $13.81 per share for a total amount of $414,240. Mr. Nelson increased his stake by 145.05% to 50,682 shares with this purchase.

Mr. Nelson is the Chairman and Chief Executive Officer of Avis Budget Group (CAR) and has been a director of Convergys since August 2008. The CEO exercised options in December and once again in February without turning around and selling them immediately. Most other insider transactions over the last six months have been sales.

You can view the list of recent insider transactions for Convergys here.

5. Whitney Holding Corp. (WTNY): $13.6

Director Eric J. Nickelsen acquired 30,000 shares of this regional bank, paying $13.07 per share for a total amount of $391,971. Mr. Nickelsen increased his stake by 33.22% to 120,319 shares with this purchase.

This was a very interesting purchase. As mentioned in our Merger Arbitrage Mondays post on December 27th, Hancock Holding Company (HBHC) made a bid to acquire Whitney in a $1.5 billion all stock deal, where Whitney shareholders will receive 0.418 shares of Hancock in exchange for each share of Whitney common stock they hold.

As of last Monday, the spread on the deal was 2.73% or nearly 7% annualized. This purchase could be construed as a vote of confidence in the deal closing and potentially an attempt at capturing the spread or expectations of a higher bid for the company. The spread narrowed almost immediately after this filing came out and according to our Merger Arbitrage Tool, the spread is now 1.61% or 4.26% annualized.

You can view the list of recent insider transactions for Whitney Holding here.

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $27.25

Director Bill Gates sold 15 million shares of Microsoft for $27.85, generating $417.78 million from the sale.

You can view the list of recent insider transactions for Microsoft here.

2. Stonemor Partners LP (STON): $29.45

Director Robert B. Hellman Jr. sold 1,849,366 shares of this cemetery operator for $28.01, generating $51.8 million from the sale. These shares were sold indirectly through various trusts.

You can view the list of recent insider transactions for Stonemor Partners here.

3. Perrigo Co. (PRGO): $73.46

Shares of this drug and nutritional products manufacturer were sold by 6 insiders:

• Director Michael J. Jandernoa sold 408,913 shares for $71.74, generating $29.34 million from the sale. These shares were sold indirectly through various trusts.
• Executive VP & CFO Judy L. Brown sold 21,978 shares for $71.38, generating $1,568,897 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Executive VP U.S. Generics Sharon Kochan sold 8,724 shares for $71.96, generating $627,816 from the sale. 5,607 of these shares were sold as a result of exercising options immediately prior to the sale.
• Director Gary M. Cohen sold 5,814 shares for $71.71, generating $416,911 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Laurie Brlas sold 5,000 shares for $70.78, generating $353,897 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP & GM Perrigo Israel Refael Lebel sold 3,206 shares for $71.86, generating $230,384 from the sale.

You can view the list of recent insider transactions for Perrigo here.

4. Estee Lauder Companies Inc. (EL): $94.15

Shares of this cosmetic products company were sold by 5 insiders:

• Exec. V.P. – CFO Richard W Kunes sold 140,699 shares for $87.58, generating $12,322,744 from the sale. 100,000 of these shares were sold as a result of exercising options immediately prior to the sale.
• Group President John Demsey sold 84,167 shares for $90.57, generating $7,623,159 from the sale. 64,167 of these shares were sold as a result of exercising options immediately prior to the sale.
• Group President, International Cedric Prouve sold 50,000 shares for $91.35, generating $4,567,735 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP for Global Research & Dev. Harvey Gedeon sold 50,000 shares for $88.71, generating $4,435,654 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Exec. VP, Gen. Counsel & Secty Sara E Moss sold 12,500 shares for $86.46, generating $1,080,726 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Estee Lauder here.

5. Intuitive Surgical, Inc. (ISRG): $345.27

Shares of this medical appliances & equipment company were sold by 3 insiders:

• Director Robert W. Duggan sold 73,752 shares for $330.60, generating $24.38 million from the sale. 23,750 of these shares were sold as a result of exercising options immediately prior to the sale.
• SVP & CFO Marshall Mohr sold 5,000 shares for $335.40, generating $1.68 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• SVP & General Counsel Mark J. Meltzer sold 1,375 shares for $337.00, generating $463,375 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Intuitive Surgical here.

You can view the full list of sales from this Insider Sales page.