Insider Weekends – January 27, 2012

Welcome to edition eighty six of Insider Weekends. Insider buying increased with insiders purchasing $30.96 million of their stock last week compared to $28.83 million in the week prior. Selling also increased with insiders selling $716.8 million worth of stock last week compared to $580.05 million in the week prior. We excluded a large $463 million insider purchase of Icahn Enterprises (IEP) by Carl Icahn because it was related to participation in a rights offering and not an open market purchase.

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 increased to 23.15. In other words, insiders sold more than 23 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 20.12.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 January 27, 2012

Insider Sell Buy Ratio January 27, 2012

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. Kronos Worldwide Inc. (KRO): $23.1

Chairman of the Board Harold C. Simmons acquired 81,000 shares of this titanium dioxide producer, paying $21.04 per share for a total amount of $1.7 million. These shares were purchased indirectly by Mr. Simmons’s spouse.

This is a sizable purchase but not as large as her 367,666 share purchase in November as you can see from this page. The company looks attractive on several key metrics and scores a perfect 10 on our proprietary model.

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

P/E: 9.72 Forward P/E: 7.6 Industry P/E: 10.5
P/S: 1.41 Price/Book: 2.98 EV/EBITDA: 5.74
Market Cap: $2.68B Avg. Daily Volume: 759,661 52 Week Range: $14.16 – $34.5

2. NII Holdings Inc. (NIHD): $20.43

President, Nextel Mexico Peter A. Foyo acquired 37,126 shares of this wireless communications company, paying $19.24 per share for a total amount of $714,211. Mr. Foyo increased his stake by 53% to 107,175 shares with this purchase.

This is the fifth insider to purchase shares of this wireless service provider as you can see from this page. We covered the company in our third weekly focus article and I hold the stock both in my personal portfolio as well as the Insider Trade Reports portfolio.

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

P/E: 11.53 Forward P/E: 13.18 Industry P/E: N/A
P/S: 0.51 Price/Book: 1.06 EV/EBITDA: 3.13
Market Cap: $3.50B Avg. Daily Volume: 2,888,490 52 Week Range: $18.82 – $44.21

3. InterDigital, Inc. (IDCC): $38.05

Shares of this wireless technology solutions provider were acquired by 3 insiders:

  • Director Steven T. Clontz acquired 10,000 shares, paying $36.43 per share for a total amount of $364,300. Mr. Clontz increased his stake by 11.65% to 95,807 shares with this purchase.
  • President and CEO William J. Merritt acquired 6,828 shares, paying $36.52 per share for a total amount of $249,359. Mr. Merritt increased his stake by 6.33% to 114,695 shares with this purchase.
  • Executive VP, Communications & Investor Relations Janet Meenehan Point acquired 1,500 shares, paying $36.29 per share for a total amount of $54,435. Ms. Point increased her stake by 8.93% to 18,295 shares with this purchase.

This cluster of insider purchases follows a 19% drop in the stock earlier this week. The stock dropped sharply after an announcement by the company that it had ended a review of a possible sale of the company earlier this week and that it could not find any buyers for its wireless patents. The company’s pre-announcement of Q4 results with revenue of $74.2 million and net income of $21 million or 46 cents per share did little to appease investors.

Revenue and earnings are down year-over-year as well as on a sequential quarter basis. On the positive side, the company has over half a billion in net cash on its balance sheet, has great margins on account of the nature of its business (licensing its wireless patents) and trades at a reasonable valuation of 7 times EBITDA.

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

P/E: 17.22 Forward P/E: 18.84 Industry P/E: 12.91
P/S: 5.17 Price/Book: 3.69 EV/EBITDA: 7.06
Market Cap: $1.73B Avg. Daily Volume: 1,221,420 52 Week Range: $34.61 – $82.5

4. Unilife Corporation (UNIS): $4.23

Chief Executive Officer Alan Shortall acquired 25,000 shares of this syringe and healthcare equipment manufacturer, paying $4.05 per share for a total amount of $101,314. Mr. Shortall increased his stake by 0.46% to 5,441,643 shares with this purchase.

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

P/E: N/A Forward P/E: N/A Industry P/E: 17.08
P/S: 49.42 Price/Book: 5.68 EV/EBITDA: -7.04
Market Cap: $263.83M Avg. Daily Volume: 293,103 52 Week Range: $2.82 – $6.04

5. U.S. Bancorp (USB): $27.86

Shares of this regional bank were acquired by 2 insiders:

  • EVP, General Counsel, and Secretary Lee R. Mitau acquired 1,500 shares, paying $25.35 per share for a total amount of $38,025.
  • Vice Chairman Joseph C. Hoesley acquired 1,500 shares, paying $25.55 per share for a total amount of $38,325. These shares were purchased indirectly by IRA.

You can view the list of recent insider transactions for U.S. Bancorp here.

P/E: 11.33 Forward P/E: 9.54 Industry P/E: 13.04
P/S: 3.21 Price/Book: 1.69 EV/EBITDA: N/A
Market Cap: $53.21B Avg. Daily Volume: 13,057,500 52 Week Range: $20.1 – $29.42

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $29.23

Shares of Microsoft were sold by 4 insiders:

  • Founder Bill Gates sold 10 million shares for $29.39, generating $293.9 million from the sale.
  • Senior Vice President Lisa E. Brummel sold 151,112 shares for $29.62, generating $4.5 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Senior Vice President Bradford L. Smith sold 110,000 shares for $29.10, generating $3.2 million from the sale.
  • Chief Accounting Officer Frank H. Brod sold 10,000 shares for $29.75, generating $297,510 from the sale.

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

P/E: 10.59 Forward P/E: 9.78 Industry P/E: 25.38
P/S: 3.44 Price/Book: 3.86 EV/EBITDA: 6.91
Market Cap: $245.26B Avg. Daily Volume: 55,017,000 52 Week Range: $23.65 – $29.95

2. AutoZone Inc. (AZO): $347.58

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

  • 10% owner Eddie Lampert (of Sears Holdings fame) sold 300,024 shares for $347.04, generating $104.12 million from the sale. 117,930 of these shares were sold directly and the rest were sold indirectly through ESL Investments.
  • Senior Vice President Timothy W. Briggs sold 5,625 shares for $346.82, generating $1.95 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director William C. Crowley sold 1,522 shares for $347.05, generating $528,206 from the sale. 1,004 of these shares were sold directly and the rest were sold indirectly through Tynan, LLC.

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

P/E: 16.98 Forward P/E: 13.06 Industry P/E: N/A
P/S: 1.67 Price/Book: N/A EV/EBITDA: 9.78
Market Cap: $13.68B Avg. Daily Volume: 342,348 52 Week Range: $247.36 – $350.55

3. CLARCOR Inc. (CLC): $51.77

Shares of this filtration systems provider were sold by 2 insiders:

  • Director Norman E. Johnson sold 208,819 shares for $51.92, generating $10.8 million from the sale.
  • Director Robert J. Burgstahler sold 15,000 shares for $52.36, generating $785,452 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 CLARCOR Inc. here.

P/E: 21.39 Forward P/E: 17.49 Industry P/E: 11.57
P/S: 2.31 Price/Book: 3.12 EV/EBITDA: 11.54
Market Cap: $2.60B Avg. Daily Volume: 393,021 52 Week Range: $39.13 – $54.22

4. EXCO Resources Inc. (XCO): $8.21

Chairman and CEO Douglas H. Miller sold 1,186,681 shares of this natural gas company for $7.85, generating $9.3 million from the sale.

This was an interesting sale as it was done in order to satisfy a margin call.

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

P/E: 15.35 Forward P/E: 13.46 Industry P/E: 16.76
P/S: 2.4 Price/Book: 0.99 EV/EBITDA: 6.78
Market Cap: $1.76B Avg. Daily Volume: 3,508,070 52 Week Range: $7.66 – $21.04

5. Consolidated Edison Inc. (ED): $58.89

Director Eugene R. McGrath sold 100,000 shares of this electric utility for $58.39, generating $5.8 million from the sale.

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

P/E: 16.5 Forward P/E: 15.26 Industry P/E: 15.02
P/S: 1.35 Price/Book: 1.53 EV/EBITDA: 8.83
Market Cap: $17.25B Avg. Daily Volume: 1,822,520 52 Week Range: $48.55 – $62.74

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

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