Insider Trading Report Edition #229: Notable Buys And Sales

Welcome to edition 229 of Insider Weekends. Insider buying increased last week with insiders buying $90.85 million of stock compared to $63.4 million in the week prior. Selling also increased significantly with insiders selling $2.18 billion of stock last week compared to $1.51 billion 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 edged up a little to 23.95. In other words, insiders sold  almost 24 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 23.88. 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 November 7, 2014

Insider Sell Buy Ratio November 7, 2014

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. Southern Copper Corp. (SCCO): $30.2

Chairman of the Board German Larrea Mota-Velasco acquired 500,000 shares of this copper mining company, paying $28.87 per share for a total amount of $14.44 million. Mr. Velasco increased his stake by 31.86% to 2,069,367 shares with this purchase.

This is the fifth week we are reporting large purchases of Southern Copper by Mr. Mota-Velasco and these were his largest purchases yet. We wrote the following about the company after his last set of purchases 7 weeks ago,

As the name implies, Southern Copper generates a majority (75%) of its revenue from copper, 12% from molybdenum and nearly 5% from silver. While the company appears to be well run, the headwinds they have faced include low copper prices, high stockpiles of copper and low silver prices.

While the company expects copper supply to drop and sees signs of stockpiles depleting, it remains to be seen if global demand and hence prices will pick up. Southern Copper is spending aggressively (CapEx is well over net income) and expects their copper production capacity to increase 87% by 2015 when compared to 2013 levels. They obviously see a brighter future than is evident right now.

One bright spot for the company right now is molybdenum, where they saw a 30% increase in production last quarter. Molybdenum prices are also up sharply this year despite some weakness in the summer.

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

P/E: 18.09 Forward P/E: 15.65 Industry P/E: 17.38
P/S: 4.05 Price/Book: 4.06 EV/EBITDA: 9.87
Market Cap: $24.71B Avg. Daily Volume: 1,975,620 52 Week Range: $24.5 – $33.9
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Disclosure: None.

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