Insider Weekends – October 28, 2011

Welcome to edition seventy three of Insider Weekends. Insider buying increased with insiders purchasing $22.2 million of their stock last week compared to $3.9 million in the week prior. Selling also increased with insiders selling $987.1 million worth of stock compared to $626.7 million in the week prior. A fourth of these sales were on account of Bill Gates selling Microsoft (MSFT) stock, probably to fund his philanthropic efforts.

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 dropped down to 44.4. In other words, insiders sold more than 44 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 162.5. 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. Masimo Corporation (MASI): $20.24

CEO and Chairman of the Board Joe E. Kiani acquired 64,596 shares of this medical technology company, paying $20.24 per share for a total amount of $1.3 million. These shares were purchased indirectly through trusts.

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

2. Itron, Inc. (ITRI): $37.22

Shares of this water and energy meters company were acquired by 2 insiders:

• President and CEO Leroy D. Nosbaum acquired 27,000 shares, paying $37.31 per share for a total amount of $1 million. Mr. Nosbaum increased his stake by 52.25% to 78,679 shares with this purchase.
• Chairman of the Board Jon E. Eliassen acquired 1,000 shares, paying $37.36 per share for a total amount of $37,357. Mr. Eliassen increased his stake by 10.19% to 10,812 shares with this purchase.

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

3. Popular Inc. (BPOP): $1.9

Shares of this Puerto Rico based regional bank were acquired by 2 insiders:

• Chairman & CEO Richard L. Carrion acquired 235,343 shares, paying $1.77 per share for a total amount of $416,557. Mr. Carrion increased his stake by 13.03% to 2,041,428 shares with this purchase. These shares were acquired through a discretionary purchase under a savings and investment plan.
• Sr. EVP & CFO Jorge A. Junquera acquired 105,000 shares, paying $1.80 per share for a total amount of $189,000. Mr. Junquera increased his stake by 15.90% to 765,297 shares with this purchase. This is a discretionary purchase under a savings and investment plan.

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

4. Comtech Telecommunications Corp. (CMTL): $33.41

Shares of this communication equipment company were acquired by 5 insiders:

• Chairman, CEO & President Fred Kornberg acquired 10,000 shares, paying $31.51 per share for a total amount of $315,100. Mr. Kornberg increased his stake by 2.67% to 385,000 shares with this purchase.
• Sr. Vice President & CFO Michael Porcelain acquired 3,200 shares, paying $32.07 per share for a total amount of $102,624. Mr. Porcelain increased his stake by 8.18% to 42,305 shares with this purchase.
• Senior Vice President Robert G. Rouse acquired 3,000 shares, paying $31.84 per share for a total amount of $95,520.
• Corporate Controller Michael Bondi acquired 300 shares, paying $31.95 per share for a total amount of $9,585. Mr. Bondi increased his stake by 74.07% to 705 shares with this purchase.
• Vice President of Finance Nancy Stallone acquired 100 shares, paying $31.84 per share for a total amount of $3,184. Ms. Stallone increased her stake by 22.22% to 550 shares with this purchase.

We are finally seeing an uptick in insider purchasing and this cluster purchase was very interesting. We reported on a trio of purchases in June where insiders picked up shares for around $24 as you can see from this page.

Back then we wrote the following, “These are by far the most interesting insider purchases of the day. Not only are we seeing multiple insider purchases, the CFO has purchased shares several times since last October. The only insider sale was an options related sale by a Senior Vice President in January as you can see from this page. The company has $389 million in net cash on its balance sheet after deducting long-term debt and trades at an extremely cheap 2 times free cash flow.

The main concern is a decline in both revenue and net income over the last three quarters. The company sports a dividend yield of 4.1%.”

Voluntary Disclosure: I picked up a position in Comtech for my trading portfolio following these purchases.

You can view the list of recent insider transactions for Comtech Telecommunications Corp. here.

5. Freescale Semiconductor Holdings I, Ltd. (FSL): $13.7

Chief Executive Officer Richard M. Beyer acquired 40,000 shares of this semiconductor company, paying $12.16 per share for a total amount of $486,348. Mr. Beyer increased his stake by 9.82% to 447,139 shares with this purchase.

Freescale Semiconductor went public earlier this year at $18/share and after briefly touching the $20 level in July, has been declining steadily. This is the first insider purchase at the company. The company has been posting losses and free cash flow has been lumpy, swinging from positive to negative from quarter to quarter.

You can view the list of recent insider transactions for Freescale Semiconductor Holdings I, Ltd. here.

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

Notable Insider Sales:

1. Apollo Group Inc. (APOL): $48.16

Shares of this for-profit education company were sold by 5 insiders:

• Vice Chrmn of the Board Peter V. Sperling sold 175,000 shares for $47.86, generating $8.4 million from the sale. 260 of these shares were sold as a result of exercising options immediately prior to the sale.
• President-UOPX William John Pepicello sold 11,628 shares for $48.59, generating $565,005 from the sale.
• SR VP, Chief HR Officer Frederick James Newton sold 4,194 shares for $48.39, generating $202,948 from the sale.
• EVP, Academic Strategies Terri C. Bishop sold 3,733 shares for $47.83, generating $178,549 from the sale.
• VP, CAO & Controller Gregory James Iverson sold 867 shares for $49.00, generating $42,483 from the sale. 278 of 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 Apollo Group Inc. here.

2. Mitek Systems Inc. (MITK): $10.34

Shares of this application software company were sold by 5 insiders:

• Director John M. Thornton sold 344,798 shares for $11.77, generating $4.1 million from the sale.
• President and CEO James B. Debello sold 240,000 shares for $11.71, generating $2.8 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Vinton Paul Cunningham sold 5,000 shares for $11.64, generating $58,180 from the sale.
• Director Alex W. Hart sold 4,000 shares for $11.64, generating $46,550 from the sale.

You can view the list of recent insider transactions for Mitek Systems Inc. here.

3. Jabil Circuit Inc. (JBL): $21.32

Shares of this electronic manufacturing services provider were sold by 5 insiders:

• EVP, CEO, Materials Tech Group John P. Lovato sold 124,236 shares for $19.72, generating $2.4 million from the sale. 20,234 of these shares were sold as a result of exercising options immediately prior to the sale.
• SVP, Controller Michael Dastoor sold 70,875 shares for $20.05, generating $1.4 million from the sale. 3,255 of these shares were sold as a result of exercising options immediately prior to the sale.
• EVP, CEO, After Mkt Svcs Group Hartmut Liebel sold 52,000 shares for $20.54, generating $1.1 million from the sale.
• Chief Financial Officer Forbes I. Alexander sold 31,314 shares for $20.32, generating $636,166 from the sale.
• Treasurer Sergio Cadavid sold 27,138 shares for $20.46, generating $555,180 from the sale.

You can view the list of recent insider transactions for Jabil Circuit Inc. here.

4. Select Comfort Corporation (SCSS): $20.53

Shares of this mattress manufacturer were sold by 6 insiders:

• Chief Financial Officer Wendy Lee Schoppert sold 80,000 shares for $21.32, generating $1.7 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• President and CEO William R. Mclaughlin sold 80,000 shares for $21.38, generating $1.7 million from the sale.
• COO Shelly Radue Ibach sold 50,000 shares for $21.04, generating $1.1 million from the sale.
• Sr. VP and General Counsel Mark A. Kimball sold 33,751 shares for $20.83, generating $702,928 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Ervin R. Shames sold 15,000 shares for $22.04, generating $330,657 from the sale.
• Chief HR & Strategy Officer Karen R. Richard sold 8,000 shares for $21.74, generating $173,925 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 Select Comfort Corporation here.

5. Constellation Brands Inc. (STZ): $20.57

Shares of this alcoholic beverages company were sold by 2 insiders:

• President & CEO Robert Sands sold 189,344 shares for $20.24, generating $3.8 million from the sale.
• Chairman of the Board Richard Sands sold 46,700 shares for $20.25, generating $945,689 from the sale.

You can view the list of recent insider transactions for Constellation Brands Inc. here.

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