Insider Weekends – November 11, 2011

Welcome to edition seventy five of Insider Weekends. Insider buying increased with insiders purchasing $40.4 million of their stock last week compared to $38.1 million in the week prior. Selling decreased with insiders selling $1.1 billion worth of stock compared to $1.4 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 purchases that week. The adjusted ratio for last week dropped down to 27.2. In other words, insiders sold more than 27 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 37.1. 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. Furiex Pharmaceuticals, Inc. (FURX): $16.93

Shares of this drug development collaboration company were acquired by 2 insiders:

• Director Fredric N. Eshelman acquired 265,017 shares, paying $15.97 per share for a total amount of $4.2 million. Mr. Eshelman increased his stake by 19.69% to 1,611,220 shares with this purchase.
• Chief Financial Officer Marshall H. Woodworth acquired 6,211 shares, paying $14.78 per share for a total amount of $91,799.

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

2. Chesapeake Energy Corporation (CHK): $26.45

Director Louis A. Simpson acquired 100,000 shares of this oil and natural gas producer, paying $26.69 per share for a total amount of $2.7 million. These shares were purchased indirectly through a trust.

Insiders of Chesapeake have been buying its stock as you can see from this page and Mr. Simpson also picked up 100,000 shares in August for $2.75 million.

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

3. Calumet Specialty Products Partners LP (CLMT): $19.47

Shares of this petroleum products refiner were acquired by 3 insiders:

• Director Fred M. Fehsenfeld acquired 50,000 shares, paying $18.74 per share for a total amount of $937,000. Mr. Fehsenfeld increased his stake by 13.11% to 431,375 shares with this purchase.
• President and COO Jennifer Straumins acquired 16,000 shares, paying $18.90 per share for a total amount of $302,400.
• Director George C. Morris acquired 4,040 shares, paying $18.60 per share for a total amount of $75,144.

Calumet first came to my attention last August following a $13.68 million purchase by the CEO. The company priced a secondary offering at $18/unit in September to help fund the $442 million purchase of another refinery. I noticed that insiders have consistently picked up shares in the $15 to $18 range over the last couple of years. Calumet Specialty Products is a Master Limited Partnership (MLP) with a 10.5% yield.

You can view the list of recent insider transactions for Calumet Specialty Products Partners LP here.

4. Gentiva Health Services Inc. (GTIV): $5.43

Shares of this home based healthcare provider were acquired by 7 insiders:

• Director Robert S. Forman acquired 81,322 shares, paying $3.97 per share for a total amount of $322,977. Mr. Forman increased his stake by -5808.71% to 79,922 shares with this purchase.
• EVP, CFO & Treasurer Eric Slusser acquired 60,000 shares, paying $3.98 per share for a total amount of $238,800. Mr. Slusser increased his stake by 111.01% to 114,050 shares with this purchase.
• Director Victor F. Ganzi acquired 52,800 shares, paying $3.90 per share for a total amount of $206,036. Mr. Ganzi increased his stake by 100.32% to 105,433 shares with this purchase.
• Chairman,CEO & President Tony Strange acquired 50,000 shares, paying $4.20 per share for a total amount of $210,240. Mr. Strange increased his stake by 14.88% to 385,947 shares with this purchase.
• SVP, Pres – Home Health Div. David A. Causby acquired 43,000 shares, paying $3.98 per share for a total amount of $171,140. Mr. Causby increased his stake by 86.59% to 92,661 shares with this purchase.
• SVP, Gen Counsel, CCO & Sec. John N. Camperlengo acquired 3,000 shares, paying $3.98 per share for a total amount of $11,931. Mr. Camperlengo increased his stake by 5.20% to 60,646 shares with this purchase.
• Sr. VP, Chief Clinical Officer Charlotte A. Weaver acquired 2,500 shares, paying $3.96 per share for a total amount of $9,900. Mr. Weaver increased his stake by 8.90% to 30,600 shares with this purchase.

Gentiva chalked up gains of 8.8% on Tuesday, November 08, 2011 rebounding from an earnings related sell-off and reacting to this cluster of insider purchases, most of which came in during regular trading hours. Despite these gains, the stock is down more than 80% this year after the industry as a whole was rattled by investigations into its billing practices and planned reductions in medicare payments to home healthcare providers in 2012.

You can view the list of recent insider transactions for Gentiva Health Services Inc. here.

5. RealD Inc. (RLD): $9.89

CEO and Chairman of the Board Michael V. Lewis acquired 105,815 shares of this 3D technology and equipment company, paying $9.45 per share for a total amount of $1 million. Mr. Lewis increased his stake by 2.01% to 5,381,526 shares with this purchase.

RealD showed up on my radar last December following a cluster of insider sales. The stock lost 73% of its value since mid-May, dropping from a high of $35 to current levels. The company has enjoyed phenomenal revenue growth over the last three years as movie theatres rushed to convert conventional screens to 3D screens.

Revenue growth appears to have faltered even as the company started reporting operating profits over the last two quarters. Unfortunately free cash flow continues to remain negative due to high CapEx.

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

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

Notable Insider Sales:

1. Nalco Holding Co. (NLC): $38.92

Shares of this chemicals company were sold by 2 insiders:

• Executive VP, President. Asia Pacific Eric G. Melin sold 173,261 shares for $38.55, generating $6.7 million from the sale. 156,606 of these shares were sold as a result of exercising options immediately prior to the sale.
• Senior EVP, President WPS David E. Flitman sold 34,258 shares for $38.51, generating $1.3 million from the sale.

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

2. Campbell Soup Co. (CPB): $33.79

Director Charlotte C. Weber sold 200,000 shares of Campbell Soup for $34.00, generating $6.8 million from the sale.

You can view the list of recent insider transactions for Campbell Soup Co. here.

3. Riverbed Technology, Inc. (RVBD): $28.54

Shares of this network products company were sold by 2 insiders:

• Chief Technology Officer Steven McCanne sold 100,000 shares for $28.62, generating $2.9 million from the sale. These shares were sold indirectly through a trust.
• Exec. VP, Marketing & Bus. Dev. Eric Wolford sold 40,000 shares for $28.39, generating $1.1 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 Riverbed Technology, Inc. here.

4. Shutterfly, Inc. (SFLY): $38.39

VP & General Manager, Tiny Prints Ed Han sold 96,000 shares of this internet-based photo products company for $41.51, generating $3.98 million from the sale. These shares were sold indirectly through a trust.

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

5. Amgen Inc. (AMGN): $57.86

Shares of this biotech company were sold by 3 insiders:

• Chairman of the Board and CEO Kevin W. Sharer sold 52,500 shares for $58.22, generating $3.1 million from the sale. These shares were sold indirectly through a trust.
• EVP, Operations Fabrizio Bonanni sold 10,000 shares for $58.12, generating $581,233 from the sale. These shares were sold indirectly through a trust.
• SVP & CCO Anna Richo sold 1,500 shares for $58.07, generating $87,105 from the sale. These shares were sold indirectly through a trust.

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

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