Insider Weekends – December 2, 2011

Welcome to edition seventy eight of Insider Weekends. Insider buying decreased with insiders purchasing $41.01 million of their stock last week compared to $130.9 million in the week prior. Selling also decreased with insiders selling $558.9 million worth of stock last week compared to $736.9 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 went up to 13.4. In other words, insiders sold more than 13 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 5.6. 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.

Insider Sell Buy Ratio December 2, 2011

Insider Sell Buy Ratio December 2, 2011

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. American Public Education, Inc. (APEI): $38.5

Director Timothy T. Weglicki acquired 344,600 shares of this for-profit education company, paying $36.70 per share for a total amount of $12.6 million. These shares were purchaed indirectly by private equity firm ABS Capital Partners, of which Mr. Weglicki is a founding partner. He has served as a director of American Public Education since 2002 and was appointed Vice Chairman in 2010.

American Public Education is the parent of American Military University (AMU) and American Public University (APU). The company formerly known as American Military University specializes in military studies and public service studies. The stock has held up much better than other for-profit education companies partly because of its specialized focus and partly because the market does not believe the company is plagued by the problems affecting other companies in this industry.

The company recently reported third quarter earnings of 60 cents per share, well above estimates of 42 cents per share. However their fourth quarter outlook of earnings between 58 and 60 cents per share was below estimates of 64 cents per share despite projections of 29% growth in new student enrollment.

You can view the list of recent insider transactions for American Public Education, Inc. here.

P/E: 18.84 Forward P/E: 15.71 Industry P/E: 17.65
P/S: 2.83 Price/Book: 5.69 EV/EBITDA: 8.6
Market Cap: $686.99M Avg. Daily Volume: 234,381 52 Week Range: $27.2 – $49.29

2. Federal-Mogul Corp. (FDML): $15.13

Director Carl C. Icahn acquired 188,200 shares of this auto parts manufacturer, paying $13.79 per share for a total amount of $2.6 million. These shares were purchased indirectly by Icahn Enterprises Holdings L.P.

You can view the list of recent insider transactions for Federal-Mogul Corp. here.

P/E: 7.72 Forward P/E: 7 Industry P/E: 7.97
P/S: 0.21 Price/Book: 1.07 EV/EBITDA: 5.26
Market Cap: $1.50B Avg. Daily Volume: 206,911 52 Week Range: $13.13 – $27.2

3. Winthrop Realty Trust (FUR): $9.47

Chairman/CEO Michael L. Ashner acquired 100,000 shares of this diversified REIT, paying $25.00 per share for a total amount of $2.5 million. 60,000 of these shares were purchased indirectly by the Ashner Family Evergreen Foundation.

This diversified REIT leases office space and also has a stake in apartment properties. Funds From Operations (FFO) for the first nine months of the year were $1.37 per share on revenue of $33.06 million. Net income in the fourth quarter is expected to be high on account of a $6.5 million payment received by the company following the resolution of a pending lawsuit. Winthrop was up almost 8% last Wednesday spurned on by a big rally in stocks and also on account of this purchase. The REIT sports a yield of 7%.

You can view the list of recent insider transactions for Winthrop Realty Trust here.

P/E: 11.62 Forward P/E: 6.49 Industry P/E: N/A
P/S: 4.25 Price/Book: 0.85 EV/EBITDA: 10.79
Market Cap: $312.90M Avg. Daily Volume: 160,657 52 Week Range: $8.05 – $13.29

4. Kronos Worldwide Inc. (KRO): $19.71

Shares of this titanium dioxide producer were acquired by 2 insiders:

  • Chairman of the Board Harold C. Simmons acquired 100,000 shares, paying $18.18 per share for a total amount of $1.8 million. These shares were purchased indirectly by Mr. Simmons’s spouse.
  • Director Glenn R. Simmons acquired 3,000 shares, paying $17.64 per share for a total amount of $52,935. Mr. Simmons increased his stake by 24.37% to 15,312 shares with this purchase. 2,450 of these shares were purchased indirectly by Mr. Simmons’s spouse.

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

P/E: 8.29 Forward P/E: 5.85 Industry P/E: 9.17
P/S: 1.21 Price/Book: 2.55 EV/EBITDA: 4.96
Market Cap: $2.28B Avg. Daily Volume: 846,594 52 Week Range: $14.16 – $34.5

5. Apple Inc. (AAPL): $389.7

Director Robert A. Iger acquired 2,670 shares of Apple, paying $374.90 per share for a total amount of $1 million.

Disney’s CEO Bob Iger was appointed to Apple’s board earlier this month and new directors often tend to buy shares. So I would not read much into this purchase.

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

P/E: 14.08 Forward P/E: 10.03 Industry P/E: 13.14
P/S: 3.33 Price/Book: 4.71 EV/EBITDA: 9.45
Market Cap: $362.19B Avg. Daily Volume: 19,312,400 52 Week Range: $310.5 – $426.7

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

Notable Insider Sales:

1. O’Reilly Automotive Inc. (ORLY): $77.03

Shares of this auto parts retailer were sold by 3 insiders:

  • Chairman of the Board David E. O’Reilly sold 200,000 shares for $76.45, generating $15.3 million from the sale. 150,000 of these shares were sold indirectly by Mr. O’Reilly as trustee for his children and in the company’s 401k plan.
  • COO & Co-President Ted F. Wise sold 20,000 shares for $77.48, generating $1.5 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • CFO & EVP of Finance Thomas McFall sold 12,500 shares for $78.04, generating $975,527 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 O’Reilly Automotive Inc. here.

P/E: 22.17 Forward P/E: 17.71 Industry P/E: N/A
P/S: 1.75 Price/Book: 3.53 EV/EBITDA: 10.54
Market Cap: $9.89B Avg. Daily Volume: 1,150,730 52 Week Range: $53.33 – $78.99

2. Cameron International Corporation (CAM): $52.87

Shares of this oil and gas equipment provider were sold by 3 insiders:

  • Director Sheldon R. Erikson sold 200,000 shares for $53.58, generating $10.7 million from the sale.
  • Sr Vice President & General William C. Lemmer sold 27,182 shares for $55.00, generating $1.5 million from the sale.
  • Director Bruce W. Wilkinson sold 4,658 shares for $53.33, generating $248,411 from the sale.

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

P/E: 22.51 Forward P/E: 14.41 Industry P/E: 14.29
P/S: 1.96 Price/Book: 2.86 EV/EBITDA: 11.94
Market Cap: $12.96B Avg. Daily Volume: 3,197,350 52 Week Range: $38.77 – $63.16

3. Riverbed Technology, Inc. (RVBD): $26.23

Shares of this network products company were sold by 3 insiders:

  • Chairman and CEO Jerry M. Kennelly sold 133,332 shares for $25.19, generating $3.4 million from the sale. These shares were sold indirectly by Kennelly Partners, L.P.
  • Chief Technology Officer Steven McCanne sold 100,000 shares for $25.39, generating $2.5 million from the sale. These shares were sold indirectly through a family trust.
  • Chief Financial Officer Randy Gottfried sold 20,000 shares for $25.67, generating $513,468 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.

P/E: 77.37 Forward P/E: 23.01 Industry P/E: 11.71
P/S: 5.95 Price/Book: 5.92 EV/EBITDA: 31.84
Market Cap: $4.07B Avg. Daily Volume: 4,374,390 52 Week Range: $18.33 – $44.7

4. LKQ Corp. (LKQX): $29.93

Shares of this auto replacement parts company were sold by 3 insiders:

  • Director Kevin F. Flynn sold 100,000 shares for $30.99, generating $3.1 million from the sale. These shares were sold indirectly through a trust.
  • Co-Chief Executive Officer Joseph M. Holsten sold 98,814 shares for $29.69, generating $2.9 million from the sale. 29,354 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Senior VP — Development Walter P. Hanley sold 10,000 shares for $31.09, generating $310,949 from the sale.

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

P/E: 22.5 Forward P/E: 16.36 Industry P/E: 15.61
P/S: 1.46 Price/Book: 2.77 EV/EBITDA: 12.48
Market Cap: $4.39B Avg. Daily Volume: 733,751 52 Week Range: $20.38 – $31.25

5. Wal-Mart Stores Inc. (WMT): $58.09

Director Lee H. Scott Jr. sold 100,000 shares of Walmart for $57.12, generating $5.7 million from the sale.

You can view the list of recent insider transactions for Wal-Mart Stores Inc. here.

P/E: 12.29 Forward P/E: 11.83 Industry P/E: 20.1
P/S: 0.46 Price/Book: 3.01 EV/EBITDA: 7.37
Market Cap: $200.12B Avg. Daily Volume: 12,118,800 52 Week Range: $48.31 – $59.4

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

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