Insider Weekends – August 5, 2011

Welcome to edition sixty one of Insider Weekends. Insider buying more than quadrupled with insiders purchasing $69.8 million of their stock last week when compared to $16.63 million in the week prior. Selling also increased with insiders selling $1.25 billion worth of stock compared to $801.72 million 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 purchases that week. The adjusted ratio for last week decreased to 17.9. In other words, insiders sold nearly 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 48.21. 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. Overstock.com Inc. (OSTK): $10.94

Shares of this online discount retailer were purchased by two insiders:

1. 10% owner Francis Chou acquired 345,000 shares, paying $12.74 per share for a total amount of $4.4 million.
2. SVP, Technology Samuel J. Peterson acquired 2,000 shares, paying $12.90 per share for a total amount of $25,800. Mr. Peterson increased his stake by 8.99% to 24,253 shares with this purchase.

We don’t normally highlight purchases by 10% owners but this one was worth mentioning because Mr. Chou is considered one of the best value fund managers out of Canada and was named the Canadian Manager of the Decade in 2005. You can read a more recent profile of Mr. Chou in a Gurufocus.com article titled The Investment Guru That You Never Heard Of.

Mr. Chou along with Fairfax Financial Holdings, where Mr. Chou has been an adviser, hold over 25% of Overstock’s stock. Unfortunately for Mr. Chou, the stock has gone nowhere over the last several years and has declined precipitously this year, trading very close to its 52 week low. Revenue has been growing steadily but margins are very slim and even at these levels the numbers don’t look particularly attractive. Clearly Mr. Chou continues to see something in Overstock that I don’t.

You can view the list of recent insider transactions for Overstock.com Inc. here.

2. Overseas Shipholding Group Inc. (OSG): $21.12

Shares of this oil tanker were acquired by 4 insiders:

• Director Oudi Recanati acquired 200,000 shares, paying $19.99 per share for a total amount of $3.9 million. Mr. Recanati increased his stake by 24.95% to 1,001,710 shares with this purchase.
• Director Michael J. Zimmerman acquired 5,000 shares, paying $19.50 per share for a total amount of $97,500. Mr. Zimmerman increased his stake by 55.56% to 14,000 shares with this purchase.
• Director Thomas B. Coleman acquired 2,000 shares, paying $19.51 per share for a total amount of $39,015. Mr. Coleman increased his stake by 200% to 3,000 shares with this purchase.
• Director Thomas F. Robards acquired 750 shares, paying $20.58 per share for a total amount of $15,437.

It was odd to see this stock buck the market trend and post a gain of 4.57% on Thursday, August 04, 2011. The stock managed to post these gains despite a downgrade by Sterne Agee that cuts its target for the stock from $31 to $13 on weakness in tanker rates.

You can view the list of recent insider transactions for Overseas Shipholding Group Inc. here.

3. Morgan Stanley (MS): $20.02

Shares of this financial services firm were acquired by 5 insiders:

• President and CEO James P. Gorman acquired 100,000 shares, paying $20.62 per share for a total amount of $2.1 million. Mr. Gorman increased his stake by 13.26% to 854,393 shares with this purchase.
• Co-President-Institutional Securities Paul J. Taubman acquired 50,000 shares, paying $20.38 per share for a total amount of $1.02 million. Mr. Taubman increased his stake by 4.59% to 1,138,562 shares with this purchase.
• Chief Financial Officer Ruth Porat acquired 25,000 shares, paying $20.50 per share for a total amount of $512,500. Ms. Porat increased her stake by 3.91% to 665,169 shares with this purchase.
• Director Hutham S. Olayan acquired 5,000 shares, paying $20.00 per share for a total amount of $100,000. Mr. Olayan increased his stake by 8.25% to 65,642 shares with this purchase.
• Director James W. Owens acquired 5,000 shares, paying $22.04 per share for a total amount of $110,200. Mr. Owens increased his stake by 38.32% to 18,048 shares with this purchase.

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

4. Six Flags Entertainment Corp. (SIX): $31.56

Shares of this entertainment company were acquired by 2 insiders:

• Chairman, President & CEO James Reid-anderson acquired 78,645 shares, paying $31.78 per share for a total amount of $2.5 million. Mr. Reid-anderson increased his stake by 53.10% to 226,745 shares with this purchase.
• Executive Vice President Lance C. Balk acquired 4,593 shares, paying $31.39 per share for a total amount of $144,174. Mr. Balk increased his stake by 19.97% to 27,593 shares with this purchase.

You can view the list of recent insider transactions for Six Flags Entertainment Corp. here.

5. Ruby Tuesday, Inc. (RT): $8.7

Shares of this restaurant chain were acquired by 4 insiders:

• Director Matthew A. Drapkin acquired 148,000 shares, paying $8.76 per share for a total amount of $1.3 million.
• Chief Executive Officer Samuel E. Beall acquired 29,000 shares, paying $8.61 per share for a total amount of $249,690. Mr. Beall increased his stake by 3.07% to 972,289 shares with this purchase.
• Director Kevin T. Clayton acquired 2,500 shares, paying $8.58 per share for a total amount of $21,448. Mr. Clayton increased his stake by 5.24% to 50,254 shares with this purchase.

You can view the list of recent insider transactions for Ruby Tuesday, Inc. here.

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $25.68

Founder and Director Bill Gates sold 10 million shares of Microsoft for $27.64, generating $276.4 million from the sale.

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

2. International Business Machines Corp. (IBM): $178.05

Shares of IBM were sold by 2 insiders:

• Chairman, President and CEO Samuel J. Palmisano sold 196,741 shares for $181.02, generating $35.6 million from the sale.
• VP, Controller James J. Kavanaugh sold 8,511 shares for $174.93, generating $1.5 million 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 International Business Machines Corp. here.

3. Apollo Group Inc. (APOL): $46.11

Shares of this for-profit education company were sold by 2 insiders:

• Exec Chairman of the Board John G. Sperling sold 152,806 shares for $50.65, generating $7.7 million from the sale. These shares were sold indirectly through a trust. 62,806 of these shares were sold as a result of exercising options immediately prior to the sale.
• Vice Chairman of the Board Peter V. Sperling sold 30,000 shares for $50.73, generating $1.5 million from the sale.

You can view the list of recent insider transactions for Apollo Group Inc. here.

4. Amazon.com Inc. (AMZN): $202.7

Senior Vice President and CFO Thomas J. Szkutak sold 20,000 shares of this internet retailer for $223.12, generating $4.5 million from the sale.

You can view the list of recent insider transactions for Amazon.com Inc. here.

5. Acme Packet, Inc. (APKT): $52.39

President and CEO Andrew D. Ory sold 70,000 shares of this network software and equipment company for $57.79, generating $4.04 million from the sale.

You can view the list of recent insider transactions for Acme Packet, Inc. here.

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