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Insider Weekends – February 17, 2012

Welcome to edition eighty nine of Insider Weekends. Insider buying increased with insiders purchasing $67.4 million of their stock last week compared to $63.5 million in the week prior. Selling increased sharply with insiders selling $1.4 billion worth of stock last week compared to $939.76 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 increased to 20.8. In other words, insiders sold nearly 21 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 14.81.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 February 17, 2012

Insider Sell Buy Ratio February 17, 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. GeoEye, Inc. (GEOY): $21.7

10% Owner Stephen Feinberg acquired 600,000 shares of this satellite imaging products company, paying $20.27 per share for a total amount of $12.2 million. Mr. Feinberg increased his stake by 18.1% to 3,923,079 shares with this purchase. These shares were acquired indirectly through Cerberus Capital Management.

GeoEye, the subject of one of our weekly focus articles, has had a couple of very volatile days this week. The stock dropped 8% on Wednesday to $20.43 and then recovered most of those losses on Thursday after rallying more than 6%. The cause for this sudden drop and rebound? Competitor DigitalGlobe (DGI) fell sharply on Wednesday following a research report that outlined how budget cuts at the Pentagon may lead to lower use of commercial imaging satellites.

GeoEye fell in sympathy as it is likely to face the same headwinds as DigitalGlobe. GeoEye updated a rights agreement with its rights agent, Mellon Investor Services, that would allow an individual or group to acquire up to 30% of its stock before they are considered an “Acquiring Person”. The company also entered into a standstill agreement with Cerberus , where Cerberus will not acquire more than 29.99% stake in GeoEye.

As you can see from the purchase today and the price action, that research report did not stop Cerberus from continuing to build its stake in GeoEye.

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

P/E: 10.09 Forward P/E: 9.64 Industry P/E: 24.6
P/S: 1.41 Price/Book: 0.99 EV/EBITDA: 4.68
Market Cap: $481.44M Avg. Daily Volume: 335,082 52 Week Range: $25.16 – $44.68

2. Kronos Worldwide Inc (KRO): $22.83

Chairman of the Board Harold C. Simmons acquired 259,000 shares of this titanium dioxide producer, paying $22.50 per share for a total amount of $5.8 million. Half of these shares were purchased directly and the other half were purchased indirectly by Mr. Simmons’ spouse.

This is the largest single day purchase by Mr. Simmons since we started tracking this data in 2010. Kronos was also the subject of one of our weekly focus articles.

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

P/E: 9.6 Forward P/E: 7.51 Industry P/E: 12.6
P/S: 1.39 Price/Book: 2.93 EV/EBITDA: 5.6
Market Cap: $2.65B Avg. Daily Volume: 791,087 52 Week Range: $14.16 – $34.5

3. CVS Caremark Corporation (CVS): $44.27

EVP and President, Caremark Per G.H. Lofberg acquired 46,400 shares of this pharmacy chain, paying $42.99 per share for a total amount of $1.9 million. Mr. Lofberg increased his stake by 198.31% to 69,798 shares with this purchase.

The last big purchases we reported at CVS were purchases by Mr. Lofberg back in August 2010 when the stock was trading below $30 following a contract dispute between CVS and Walgreens.  I had CVS on my watch list for a while and when that dispute presented an opportunity to get into the stock on the cheap, I blinked and the stock never looked back. Hedge fund manager David Einhorn of Allied Capital Fame (a tedious tome but very informative), did get into the stock and recently sold his position in CVS to “fund more compelling opportunities” according to Market Folly.  The stock appears to be reasonably valued at 1.5 times book value and 8.4 times EBITDA but is no longer the bargain it was back in 2010.

You can view the list of recent insider transactions for CVS Caremark Corporation Common here.

P/E: 17.25 Forward P/E: 12.03 Industry P/E: 18.48
P/S: 0.54 Price/Book: 1.52 EV/EBITDA: 8.39
Market Cap: $57.46B Avg. Daily Volume: 8,669,440 52 Week Range: $31.3 – $45

4. Dominion Resources, Inc. (D): $50.57

Shares of this electric utility and natural gas company were acquired by 2 insiders:

  • Director Mark J. Kington acquired 25,000 shares, paying $49.82 per share for a total amount of $1.2 million. Mr. Kington increased his stake by 61.50% to 65,649 shares with this purchase.
  • Director Robert S. Jepson acquired 10,000 shares, paying $50.29 per share for a total amount of $502,890. Mr. Jepson increased his stake by 6.29% to 168,857 shares with this purchase.

It looks like we are seeing insider purchases at Dominion almost on a daily basis. The market remains mostly unimpressed by their purchases and looking at their business, I concur. Dominion is one of the nation’s largest producers and transporter of energy. The company has also applied for a license to export Liquified Natural Gas (LNG),  as natural gas is trading much higher in Europe and Asia than it is in the United States. However any revenue from these exports may be years away and an investment thesis that rests on this assumption would be flawed. The company could benefit from a general rise in natural gas prices. Market participants have been expecting a rebound in natural gas for months but a sustainable increase in prices has thus far proved elusive.

You can view the list of recent insider transactions for Dominion Resources, Inc. Common here.

P/E: 20.64 Forward P/E: 14.66 Industry P/E: N/A
P/S: 2 Price/Book: 2.52 EV/EBITDA: 11.03
Market Cap: $28.89B Avg. Daily Volume: 2,673,510 52 Week Range: $42.91 – $53.68

5. Parkway Properties, Inc. (PKY): $10.16

Shares of this office REIT were acquired by 7 insiders:

  • President and CEO James R. Heistand acquired 100,000 shares, paying $10.13 per share for a total amount of $1 million. Mr. Heistand increased his stake by 69.54% to 243,802 shares with this purchase.
  • EVP & Chief Investment Officer David R. O’Reilly acquired 11,600 shares, paying $10.17 per share for a total amount of $117,937.
  • EVP & Chief Operating Officer M. Jayson Lipsey acquired 11,406 shares, paying $10.02 per share for a total amount of $114,326. Mr. Lipsey increased his stake by 61.21% to 30,041 shares with this purchase.
  • Director Brenda J. Mixson acquired 7,000 shares, paying $14.27 per share for a total amount of $99,904. Ms. Mixson increased her stake by 116.98% to 12,984 shares with this purchase.
  • Director Charles T. Cannada acquired 5,000 shares, paying $10.05 per share for a total amount of $50,262. Mr. Cannada increased his stake by 69.80% to 12,163 shares with this purchase.
  • EVP & Chief Financial Officer Richard G. Hickson acquired 2,500 shares, paying $9.93 per share for a total amount of $24,825. Mr. Hickson increased his stake by 5.29% to 49,735 shares with this purchase.
  • EVP & Chief Accounting Officer Mandy M. Pope acquired 2,000 shares, paying $10.03 per share for a total amount of $20,054. Ms. Pope increased her stake by 4.62% to 45,248 shares with this purchase.

You can view the list of recent insider transactions for Parkway Properties, Inc. Common here.

P/E: N/A Forward P/E: 7.53 Industry P/E: 25.18
P/S: 1.36 Price/Book: 0.93 EV/EBITDA: 8.14
Market Cap: $223.39M Avg. Daily Volume: 148,344 52 Week Range: $9.02 – $18.55

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

Notable Insider Sales:

1. Crown Castle International Corp (CCI): $51.37

Shares of this wireless infrastructure provider were sold by 2 insiders:

  • Director David C. Abrams sold 2,697,983 shares for $50.36, generating $135,865,033 from the sale.
  • Senior VP, Corp Dev & Strategy Philip M. Kelley sold 26,477 shares for $49.19, generating $1,302,324 from the sale.

Mr. Abrams sales is not only noteworthy because of its size but also on account of the fact that he sold his entire indirect stake that was held through an investment fund he manages. He still holds 19,075 shares directly.

Voluntary Disclosure: I am going to initiate a hedged short position in Crown Castle International.

You can view the list of recent insider transactions for Crown Castle International Corp here.

P/E: 98.79 Forward P/E: 45.06 Industry P/E: 17.92
P/S: 7.02 Price/Book: 5.98 EV/EBITDA: 16.71
Market Cap: $14.43B Avg. Daily Volume: 1,717,970 52 Week Range: $36.38 – $51.44

2. Green Mountain Coffee Roasters, (GMCR): $69.01

Chairman of the Board Robert P. Stiller sold 500,000 shares of this specialty coffee company for $65.94, generating $32.9 million from the sale.

Voluntary Disclosure: I am going to initiate a hedged short position in Green Mountain Coffee Roasters.

You can view the list of recent insider transactions for Green Mountain Coffee Roasters, here.

P/E: 35.52 Forward P/E: 18.96 Industry P/E: 18.08
P/S: 3.31 Price/Book: 5.26 EV/EBITDA: 17.73
Market Cap: $10.69B Avg. Daily Volume: 5,671,140 52 Week Range: $39.23 – $115.98

3. Rackspace Hosting, Inc (RAX): $52.93

Shares of this server and cloud hosting company were sold by 11 insiders:

  • CEO and President A Lanham Napier sold 423,278 shares for $54.59, generating $23.1 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director S. James Bishkin sold 26,400 shares for $52.80, generating $1.4 million from the sale. 2,400 of these shares were sold indirectly by Bishkin 2000 Family, LP.
  • Senior VP and Co-GM, Hybrid Phillip Wayne Roberts Jr. sold 20,728 shares for $54.32, generating $1.1 million from the sale. 20,000 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Senior V.P., GC, and Secretary Alan Schoenbaum sold 6,479 shares for $51.00, generating $330,452 from the sale. 994 of these shares were sold as a result of exercising options immediately prior to the sale. 5,ooo of these shares were sold indirectly through a trust.
  • SVP and GM, Cloud Patrick M. Matthews sold 5,201 shares for $50.15, generating $260,819 from the sale.
  • Director Fred Reichheld sold 5,000 shares for $54.39, generating $271,927 from the sale.
  • SVP and Co-GM, Hybrid James Lewandowski sold 1,973 shares for $54.39, generating $107,305 from the sale. 1,326 of these shares were sold as a result of exercising options immediately prior to the sale.
  • VP and CIO Stephen F. Mills sold 276 shares for $53.83, generating $14,856 from the sale.
  • MD, International Taylor Rhodes sold 255 shares for $53.83, generating $13,725 from the sale.
  • Chief Operating Officer Mark Roenigk sold 251 shares for $53.83, generating $13,510 from the sale.
  • President, Cloud Lew Moorman sold 226 shares for $53.83, generating $12,164 from the sale.

You can view the list of recent insider transactions for Rackspace Hosting, Inc Common S here.

P/E: 112.62 Forward P/E: 45.24 Industry P/E: 11.21
P/S: 7.46 Price/Book: 12.94 EV/EBITDA: 26.37
Market Cap: $6.94B Avg. Daily Volume: 1,834,150 52 Week Range: $30.34 – $56.94

4. National Research Corporation (NRCI): $40.63

CEO Michael D. Hays sold 473,612 shares of this healthcare research company for $41.49, generating $19.7 million from the sale. 236,806 of these shares sold indirectly by Mr. Hays’s spouse.

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

P/E: 27.79 Forward P/E: N/A Industry P/E: 41.11
P/S: 3.83 Price/Book: 5.19 EV/EBITDA: 13.07
Market Cap: $273.16M Avg. Daily Volume: 5,732 52 Week Range: $28 – $44.44

5. EMC Corporation (EMC): $27.1

Shares of this data storage and IT infrastructure company were sold by 3 insiders:

  • Chairman, President and CEO Joseph M. Tucci sold 396,415 shares for $26.25, generating $10.4 million from the sale. 336,415 of these shares were sold indirectly through a GRAT.
  • President & COO Howard D. Elias sold 44,495 shares for $26.75, generating $1.2 million from the sale.
  • EVP & CFO David I. Goulden sold 25,000 shares for $26.60, generating $665,000 from the sale.

You can view the list of recent insider transactions for EMC Corporation Common Stock here.

P/E: 24.64 Forward P/E: 13.76 Industry P/E: N/A
P/S: 2.82 Price/Book: 2.97 EV/EBITDA: 10.65
Market Cap: $55.52B Avg. Daily Volume: 21,848,200 52 Week Range: $19.84 – $28.73

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

2 Comments

  1. Hi Asif. I am waiting for your insider report about GMCR.
    Thanks

    • Hi Maren, the focus of this week’s insider report was Genworth Financial (GNW) and hence I did not write about GMCR. I did initiate a hedged short position in GMCR as indicated in the weekly report.

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