Insider Weekends – Insiders Sell $1.4 Billion of Stock as S&P 500 Turns Lower

Welcome to edition 325 of Insider Weekends. Insider buying increased last week with insiders buying $78.67 million of stock compared to $68.39 million in the week prior. Selling also increased with insiders selling $1.42 billion of stock last week compared to $1.31 billion in the week prior.

After 7 continuous weeks of very low volatility where the S&P 500 moved less than 1% a week, volatility returned with a vengeance last week with the S&P 500 dropping 2.39% for the week.  Most of those losses came from a big 2.45% move down on Friday and volatility as tracked by the VIX jumped nearly 40% in a single day. Nuclear tests in North Korea, the possibility of the Federal Reserve raising rates before their December meeting and the upcoming presidential election all weighed heavily on investors minds. And then there is the fact that the S&P 500 is in the 8th year of a bull market even as earnings have been declining and now manufacturing activity is also declining.

As we near the end of the third quarter, insider activity is likely to be muted in the coming days and hence unlikely to provide us with much of a signal. It would be interesting to see how insiders react to further market declines after the third quarter earnings season starts. Insider activity last week was not very inspiring as some of the largest purchases (SGEN and AAP as discussed below) were by directors of companies who were buying for their funds. Amongst the insider purchases that were interesting but did not make the top 5 list were a purchase by the CFO of United Continental Holdings (UAL), a purchase by another insider of Norwegian Cruise Line Holdings (NCLH) and purchases by two insiders of troubled retailer Abercrombie & Fitch (ANF).

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 decreased to 18.1. In other words, insiders sold  more than 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 19.22. 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 September 9, 2016

Insider Sell Buy Ratio September 9, 2016

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. Seattle Genetics, Inc. (SGEN): $50.23

Director Felix Baker acquired 414,016 shares of this biotech company, paying $48.43 per share for a total amount of $20.05 million. These shares were purchased indirectly by Baker Bros. Advisors LP.

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

P/E: N/A Forward P/E: N/A Industry P/E: 22.98
P/S: 18.47 Price/Book: 10.61 EV/EBITDA: -71.66
Market Cap: $7.06B Avg. Daily Volume: 752,408 52 Week Range: $26.02 – $51.31

2. Advance Auto Parts Inc. (AAP): $152.96

Director Jeffrey C. Smith acquired 70,000 shares of this auto parts retailer, paying $158.77 per share for a total amount of $11.11 million.  These shares were purchased indirectly through various Starboard Value funds.

You can view the list of recent insider transactions for Advance Auto Parts Inc. here.

P/E: 24.7 Forward P/E: 18.61 Industry P/E: 25.3
P/S: 1.22 Price/Book: 4.25 EV/EBITDA: N/A
Market Cap: $11.26B Avg. Daily Volume: 1,017,210 52 Week Range: $131.59 – $201.24

3. Penske Automotive Group, Inc. (PAG): $47.09

Chairman & CEO Roger S. Penske acquired 225,000 shares of this auto dealer, paying $46.95 per share for a total amount of $10.56 million. These shares were purchased indirectly by Penske Automotive Holdings Corp.

You can view the list of recent insider transactions for Penske Automotive Group, Inc. here.

P/E: 12.58 Forward P/E: 11.16 Industry P/E: 12.17
P/S: 0.21 Price/Book: 2.44 EV/EBITDA: 12.93
Market Cap: $4.01B Avg. Daily Volume: 942,150 52 Week Range: $29.29 – $53.28

4. ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA): $238.73

Director Dennis K. Eck acquired 11,000 shares of this beauty products retailer, paying $246.97 per share for a total amount of $2.72 million. Mr. Eck increased his stake by 2.26% to 498,530 shares with this purchase.

You can view the list of recent insider transactions for ULTA Salon, Cosmetics &Fragrance, Inc. here.

P/E: 42.02 Forward P/E: 31 Industry P/E: 26.39
P/S: 3.51 Price/Book: 10.92 EV/EBITDA: 19.27
Market Cap: $14.89B Avg. Daily Volume: 777,966 52 Week Range: $146.77 – $278.63

5. Inovalon Holdings, Inc. (INOV): $16.02

Director William J. Teuber acquired 60,000 shares of this cloud-based data analytics company, paying $16.46 per share for a total amount of $987,660. Mr. Teuber increased his stake by 627.68% to 69,559 shares with this purchase.

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

P/E: 54.12 Forward P/E: 30.81 Industry P/E: 52.8
P/S: 5.52 Price/Book: 3.25 EV/EBITDA: 17.8
Market Cap: $2.44B Avg. Daily Volume: 618,675 52 Week Range: $13.85 – $23.87

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $127.1

Shares of Facebook were sold by 4 insiders:

  • Director Jan Koum sold 1,566,668 shares for $129.70, generating $203.2 million from the sale. These shares were sold indirectly through a trust.
  • Chief Operating Officer Sheryl Sandberg sold 327,000 shares for $129.52, generating $42.35 million from the sale. 157,212 of these shares were sold as a result of exercising options immediately prior to the sale.
  • VP Marketing & Bus. Part. David B. Fischer sold 35,000 shares for $130.32, generating $4.56 million from the sale.
  • VP and General Counsel Colin Stretch sold 750 shares for $128.27, generating $96,200 from the sale.

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

P/E: 60.76 Forward P/E: 25.12 Industry P/E: 27.86
P/S: 16.88 Price/Book: 7.4 EV/EBITDA: 30.85
Market Cap: $364.99B Avg. Daily Volume: 20,444,100 52 Week Range: $85.72 – $131.98

2. FleetCor Technologies, Inc. (FLT): $160.85

Shares of this payment products and services company were sold by 5 insiders:

  • CEO & President Ronald Clarke sold 243,617 shares for $167.37, generating $40.77 million from the sale.
  • CFO & Secretary Eric Dey sold 21,969 shares for $166.62, generating $3.66 million from the sale.  These shares were sold as a result of exercising options immediately prior to the sale.
  • CEO Brazil Armando Lins Netto sold 16,003 shares for $167.75, generating $2.68 million from the sale.
  • CEO, Europe Andrew Blazye sold 13,000 shares for $167.00, generating $2.17 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Joseph W. Farrelly sold 1,200 shares for $168.73, generating $202,476 from the sale.

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

P/E: 38.56 Forward P/E: 19.62 Industry P/E: 23.81
P/S: 9.05 Price/Book: 5.03 EV/EBITDA: 20.33
Market Cap: $14.89B Avg. Daily Volume: 620,239 52 Week Range: $107.56 – $169.59

3. Steris Plc (STE): $70.49

Director Richard Martin Steeves sold 204,778 shares of this healthcare products company for $71.19, generating $14.58 million from the sale.  These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Steris Plc here.

P/E: 40.49 Forward P/E: 16.13 Industry P/E: 33.79
P/S: 2.52 Price/Book: 2.02 EV/EBITDA: 14.75
Market Cap: $6.06B Avg. Daily Volume: 788,623 52 Week Range: $61.38 – $78.77

4. The Priceline Group Inc. (PCLN): $1413.9

Shares of this online travel company were sold by 2 insiders:

  • Interim CEO & President Jeffery H. Boyd sold 3,000 shares for $1415.00, generating $4.24 million from the sale.
  • Hd Worldwide Strat & Planning Glenn D. Fogel sold 1,000 shares for $1434.75, generating $1.43 million from the sale.

You can view the list of recent insider transactions for The Priceline Group Inc. here.

P/E: 26.89 Forward P/E: 17.69 Industry P/E: 23.81
P/S: 7.29 Price/Book: 7.71 EV/EBITDA: 19.6
Market Cap: $69.88B Avg. Daily Volume: 594,541 52 Week Range: $954.02 – $1476.52

5. Intuit Inc. (INTU): $109.25

Shares of this accounting and tax software company were sold by 3 insiders:

  • EVP & Chief Financial Officer Neil R. Williams sold 18,567 shares for $111.47, generating $2,069,656 from the sale.
  • EVP, Consumer Tax Group Daniel A. Wernikoff sold 18,567 shares for $111.47, generating $2,069,639 from the sale.
  • EVP & Chief Technology Officer Henry Tayloe Stansbury sold 11,503 shares for $111.47, generating $1,282,226 from the sale.

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

P/E: 29.58 Forward P/E: 22.03 Industry P/E: 38.66
P/S: 6.1 Price/Book: 24.64 EV/EBITDA: 19.27
Market Cap: $28.18B Avg. Daily Volume: 1,463,820 52 Week Range: $84.36 – $116.97

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

Disclaimer: I do not have any positions in any of the stocks mentioned in this article. I do have puts on a S&P 500 ETF and calls on a volatility ETF (VXX). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria

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