Insider Weekends – September 20, 2013

Welcome to edition 170 of Insider Weekends. Insider buying plunged sharply with insiders purchasing $10.86 million of their stock last week compared to $54.86 million in the week prior. Selling also decreased with insiders selling $1.12 billion of stock last week compared to $2.85 billion in the week prior. Insider buying has not been this anemic since late April 2012 and I would attribute that April drop to earnings season related caution. If this complete lack of insider enthusiasm combined with Robert Shiller’s PE 10 jumping over 24 does not give investors pause, I am not sure what will.

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 jumped to 102.75. In other words, insiders sold about 103 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 52.02. 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, 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. Clean Energy Fuels Corp. (CLNE): $12.935

CEO and President Andrew J. Littlefair acquired 127,000 shares of this natural gas fueling stations operator, paying $12.69 per share for a total amount of $1.61 million. Mr. Littlefair increased his stake by 36.28% to 477,049 shares with this purchase.

The odd thing about this purchase is that Mr. Littlefair had been consistently selling shares until earlier this month. He then decided to switch teams and purchased $1.61 million worth of shares. If this transaction runs afoul of the SEC’s short-swing rule, which prevents insiders from short-term transactions, Mr. Littlefair may have to hand over any profits from this trade to the company.

You can view the list of recent insider transactions for Clean Energy Fuels Corp. here.

2. PBF Energy Inc. (PBF): $22.25

Shares of this oil refining company were acquired by 2 insiders:

• Executive Chairman Thomas O’Malley acquired 32,864 shares, paying $22.27 per share for a total amount of $731,846. Mr. O’Malley increased his stake by 20.91% to 190,000 shares with this purchase.
• Director Dennis Houston acquired 10,000 shares, paying $22.65 per share for a total amount of $226,550. Mr. Houston increased his stake by 105.89% to 19,444 shares with this purchase.

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

3. The Home Depot, Inc. (HD): $77

Director Mark C. Vadon acquired 10,000 shares of this home improvement retailer, paying $75.20 per share for a total amount of $752,000. Mr. Vadon increased his stake by 164.07% to 16,095 shares with this purchase.

You can view the list of recent insider transactions for The Home Depot, Inc. here.

4. Hallmark Financial Services Inc. (HALL): $9

Executive Chairman Mark E. Schwarz acquired 45,463 shares of this property & casualty insurance company, paying $8.66 per share for a total amount of $393,843. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for Hallmark Financial Services Inc. here.

5. Exa Corporation (EXA): $15.52

Director John William Poduska Sr. acquired 17,991 shares of this application software company, paying $15.05 per share for a total amount of $270,777. These shares were purchased indirectly by Poduska Family Limited Partnership II.

I have had Exa on my watchlist since the company went public last June at $10/share. The stock has more than doubled since the $7.55/share purchase by the CFO in April of this year.

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

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

Notable Insider Sales:

1. Tower Group International, Ltd. (TWGP): $9.14

Chairman, President & CEO Michael H. Lee sold 1,233,460 shares of this property & casualty insurance company for $10.22, generating $12.61 million from the sale.

You can view the list of recent insider transactions for Tower Group International, Ltd. here.

2. Sotheby’s (BID): $47.22

Director John M. Angelo sold 275,000 shares of this auctioneer for $48.55, generating $13.35 million from the sale. 17,200 of these shares were sold indirectly by Mr. Angelo’s spouse.

You can view the list of recent insider transactions for Sotheby’s here.

3. Guidewire Software, Inc. (GWRE): $48.55

Shares of this insurance software company were sold by 3 insiders:

• CEO and President Marcus Ryu sold 130,000 shares for $47.94, generating $6.23 million from the sale.
• VP, Professional Services Alexander C. Naddaff sold 97,250 shares for $46.76, generating $4.55 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• VP, Product Development Jeremy Henrickson sold 20,000 shares for $46.75, generating $935,080 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 Guidewire Software, Inc. here.

4. Alliance Fiber Optic Products Inc. (AFOP): $22.23

Chair, President and Chief Executive Officer Peter C. Chang sold 488,000 shares of this fiber optic components company for $22.14, generating $10.81 million from the sale.

You can view the list of recent insider transactions for Alliance Fiber Optic Products Inc. here.

5. Dillard’s Inc. (DDS): $82.25

President Alex Dillard sold 50,000 shares of this retail chain for $81.38, generating $4.07 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Dillard’s Inc. here.

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