Insider Buys and Sells: Weekly Wrap-up
Monday, November 30, 2009 | Tycoon StaffRating:
There is no better judge of a company's health and future prospects than the actions of owners and executives of publicly traded companies. That's why insider buying and selling is a critical piece of data for investors, both institutional and individual.
As part of our continuing efforts here at The Tycoon Report to level the playing field between individual investors and the fat cats on Wall Street, we're keeping you informed -- on a daily basis and at no cost whatsoever -- of the most significant insider buying and selling.
Below is your Monday re-cap of the past week's activity of important insider buys and sells. For the most-timely data, be sure to read your Tycoon Report issues each morning!
As part of our continuing efforts here at The Tycoon Report to level the playing field between individual investors and the fat cats on Wall Street, we're keeping you informed -- on a daily basis and at no cost whatsoever -- of the most significant insider buying and selling.
Below is your Monday re-cap of the past week's activity of important insider buys and sells. For the most-timely data, be sure to read your Tycoon Report issues each morning!
SELLS
Alliance Data Systems Corporation (ADS)
Chairman of the Board J. Michael Parks SOLD $3.9 million in options.
Best Buy (BBY)
Vice Chairman Alan U. Lenzmeier SOLD $6.4 million in options.
Chairman Richard M. Schulze SOLD $21.6 million in shares.
Cognizant Technology Solutions Corp. (CTSH)
President and CEO Francisco Dsouza SOLD $6 million in shares and $1.7 million in options.
Concur Technologies Inc. (CNQR)
Chief Technology Office Michael W. Hilton SOLD $1 million in shares.
Equinix Inc. (EQIX)
President, US Peter Ferris SOLD $1.8 million in options.
First American Corp. (FAF)
Business Segment President Anand K. Nallathambi SOLD $1.5 million in shares.
Gentiva Health Services Inc. (GTIV)
Director Rodney D. Windley SOLD $1.6 million in shares.
Chairman of the Board Ronald A. Malone SOLD $1.5 million in options.
Genzyme Corp. (GENZ)
Chmn, President and CEO Henri A. Termeer SOLD $10 million in options.
GSI Commerce Inc. (GSIC)
CEO and President Michael Rubin SOLD $2.2 million in options.
Intuit Inc. (INTU)
Director Michael R. Hallman SOLD $1.3 million in options.
President, CEO and Director Brad D. Smith SOLD $2.4 million in options.
Kinetic Concepts Inc. (KCI)
Exec Vice President and CFO Martin J. Landon SOLD $1.2 million in options.
Lowe's Companies Inc. (LOW)
Chairman and CEO Robert A. Niblock SOLD $6.5 million in options.
NBTY Inc. (NTY)
Chairman and CEO Scott Rudolph SOLD $21.2 million in shares.
NetLogic Microsystems Inc. (NETL)
Vice President and CTO Varadarajan Srinivasan SOLD $1.2 million, $2.1 million and $1.2 million in options.
Silgan Holdings Inc. (SLGN)
President and CEO Anthony J. Allott SOLD $1.6 million in options.
Williams-Sonoma Inc. (WSM)
EVP, COO & CFO Sharon McCollam SOLD $3 million in options.
Economic Calendar for the Week of Nov. 30-Dec. 4
MONDAY, NOV. 30
9:45 a.m. Chicago Purchasing Managers Index
* Importance (A-F): The Chicago PMI merits a B.
* Source: Kingsbury International Ltd. and Institute for Supply Management-Chicago, Inc.
* Release Time: Typically the last business day of the month at 9:45 a.m. Eastern
There are many regional manufacturing surveys, and they tend to be ranked in order of timeliness and the importance of the region. The New York and Philadelphia Fed's surveys are the first each month, followed by the Chicago purchasing managers' report on the last day of each month.
These surveys can be of some help in forecasting the national Institute for Supply Management data. The Chicago PMI index, which is released on the last business day of the month (with data for the same month), has an impressive 91% correlation with the national ISM.
Highlights
* The Chicago PMI index jumped over the 50-point threshold for the first time since September 2008 as the index grew to 54.2 in October. The consensus expected the index to increase slightly to 49.0 from 46.1 and to remain in the contraction phase.
* The production index increased to 63.9 from 47.2 and orders rose to 61.4 from 46.3.
* Inventories continued to contract and have gotten worse over the last month as the index declined to 32.2 from 38.9.
* The only other sector that continued to contract was employment, which declined to 38.3 from 38.8.
* Other components of the index showed the manufacturing sector strengthening, including order backlogs (which increased to 41.9 from 36.7) and prices paid (which declined to 48.6 from 51.3).
Key Factors
* The entire index showed signs of a sustainable expansionary cycle.
* Unlike last month's national index, where production grew on the anticipation of new orders that never came in, production and new orders posted strong growth and entered an expansionary phase in the Chicago region.
Big Picture
* The Chicago PMI has little overall economic value, and is only watched by the financial markets because it is usually released one day in advance of the similar national ISM manufacturing survey. A significant move in this regional survey will therefore sometimes be seen as having predictive value for the ISM index.
TUESDAY, DEC. 1
10 a.m. Institute for Supply Management
* Importance (A-F): This release merits an A-.
* Source: Institute for Supply Management
* Release Time: 10 a.m. Eastern on the first business day of the month for the prior month.
* Raw Data Available At: http://www.ism.ws
The ISM report is a national survey of purchasing managers, which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders and import orders.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases.
Highlights
* The ISM index reported a faster rate of expansion than expected in October as the index increased from 52.6 to 55.7. The consensus expected the ISM index to increase to only 53.0.
* The rate of production rose as the index increased from 55.7 to 63.3 and backlogs maintained the same rate of expansion as last month.
* Surprisingly, prices posted its fourth-consecutive month of expansion as the index increased from 63.5 to 65.0.
* Inventories continued to contract as manufacturing inventories increased 4.4 points to 46.9 while customer inventories declined 0.5 to 38.5.
Key Factors
* The data from the sub-indices were interesting in the fact that new orders expansion slowed from 60.8 to 58.5 while employment showed its first sign of expansion in 14 months.
* One would expect orders would have to continue to strengthen in order to drive demand for new labor. The jump in employment may be temporary as firms bring back some furloughed employees to maintain a new production schedule through the end of December. If consumer demand does not continue to rebound beyond then, manufacturers could return to smaller workforces.
* If production continues to increase without a significant boost to new orders, backlogs will begin rapidly falling over the next few months.
* Given the heightened unemployment level and slack in the manufacturing capacity, theory suggests prices should be facing more deflationary pressures than inflationary.
Big Picture
* This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
THURSDAY, DEC. 3
8:30 a.m. Employment Cost Index
* Importance (A-F): This release merits a B-plus.
* Source: U.S. Department of Labor, Bureau of Labor Statistics
* Release Time: 8:30 a.m. Eastern, near the end of the first month of the quarter for the prior quarter.
* Raw Data Available At: http://stats.bls.gov/news.release/eci.toc.htm
Since the employment cost index was mentioned by Fed Chairman Greenspan in July 1996, it has risen into the upper echelon of economic reports in the eyes of the bond market. Its lagging nature still leaves it as a less-timely indicator of employment cost trends than the monthly hourly earnings data in the employment report.
But the ECI does add something to this picture: an adjustment for shifting employment between industries, and a look at benefit costs. These additions typically do not alter the view of the employment cost picture, which was left by hourly earnings. ECI will be much less closely watched during periods when wage inflation is not a serious market concern.
Highlights
* For the second-consecutive quarter, employment costs rose only 0.4% in Q3. While the rate of the increase was expected, it still remains the lowest change in prices in the history of the index.
* Wages and salaries, which make up approximately 70% of compensation, also maintained its 0.4% growth rate in Q3. Benefits rose 0.4% after increasing 0.3% in Q2.
* Year-over-year employment costs increases slowed for the fifth-consecutive quarter and only increased 1.5%. Last year, at this time, employment costs rose 2.9%.
* Wages and benefit increases have also declined for the fifth consecutive quarter and now stand at 1.5% and 1.6%, respectively.
Key Factors
* Employment costs are a double-edged sword. One one side, firms can take advantage of lower employment costs by receiving higher profit margins. However, lower employment compensation growth prevents the consumer from paying more for goods and increases deflationary risks.
* Employment costs will be constrained in the future as high unemployment forces workers to compete for jobs. This will push down potential wages.
Big Picture
* Employment costs are the major component of business costs. The trend in these data therefore have important implications for cost-push inflationary pressures and for profit margins. In recent quarters, the trend has been relatively steady to lower. The year-over-year total increase in the ECI is now below 2.0%. Weak overall demand in the economy should keep the ECI cost index on the current trend. At 1.5% this does not represent much inflationary pressure.
10 a.m. Non-Manufacturing ISM: Institute for Supply Management
* Importance (A-F): This release merits an improved B-.
* Source: Institute for Supply Management
* Release Time: 10 a.m. Eastern on the third business day of the month for the prior month.
* Raw Data Available At: http://www.napm.org
The non-manufacturing ISM report is a national survey of purchasing managers that covers new orders, employment, inventories, supplier delivery times, prices, backlog orders, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The index should be far more indicative of the broader economy, given its inclusion of service-producing as well as good-producing sectors outside of manufacturing. However, the short history of the index dates to only July 1997 and doesn't provide the insight of a longer period inclusive of varied economic climates.
Highlights
* The ISM non-manufacturing index pulled back slightly in October as the Purchasing Managers Index dropped from 50.9 to 50.6. The index remained above the 50.0 threshold and represented the second-consecutive monthly expansion.
* The consensus expected the index to have grown to 51.5.
* Business production increased by only 0.1 to 55.2, but the change was faster than what occurred in September. New orders posted a much stronger gain of 1.4 to 55.6.
* Inventories have contracted for 14 consecutive months and in October the contraction sped up as the index fell from 47.5 to 43.0. Inventory sentiment increased by 1.5 to 63.5 and signaled that firms still believe they have too much inventory on hand.
* Employment levels contracted for the 18th consecutive month as the index fell from 44.3 to 41.1.
* Prices remain volatile and entered an expansion phase as the index increased to 53.0.
Key Factors
* The decline in the ISM non-manufacturing index isn't too worrying as the two main components, production and new orders, posted positive increases.
* As long as production and orders continue to increase, we should expect to see expansion in the sector.
* Inventories remain a problem and a rebound doesn't look too likely in the near future. Inventory sentiment is directly related to expected consumer demand, and until firms truly believe demand will increase sentiment will remain too high. Fortunately for the economy, increases in inventory sentiment rarely lead to an actual change in inventory levels.
* Deflationary pressures continue to outweigh inflationary concerns and the price index should fall over the next few months.
Big Picture
* The market generally doesn't pay much attention to the services index because the service sector is less cyclical than the manufacturing sector. During the current recession, the service index held steady around 50.0% through September 2009 before bottoming at 37.4% in November 2008. Since then, the service index has slowly risen back and finally broke the 50.0% barrier. In contrast, the manufacturing index, with the exception of January 2009, stayed below 50% from December 2008 through July 2009 and bottomed at 32.9% in December 2008.
FRIDAY, DEC. 4
8:30 a.m. The Employment Report
* Importance (A-F): This release merits an A.
* Source: Bureau of Labor Statistics, U.S. Department of Labor.
* Release Time: First Friday of the month at 8:30 a.m. Eastern for the prior month
* Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
The employment report is actually two separate reports, which are the results of two separate surveys.
The household survey is a survey of roughly 60,000 households; this survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses; it produces the nonfarm payrolls, average workweek and average hourly earnings figures, to name a few. Both surveys cover the payroll period that includes the 12th of each month.
The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure -- the market focusses primarily on the more-comprehensive establishment survey. Together, these surveys make up the employment report, the most timely and broad indicator of economic activity released each month.
Highlights
* The unemployment rate broke above the 10% barrier and jumped 0.4 percentage points to 10.2% in October. This is the highest rate of unemployment since 1983.
* The consensus did not foresee the unemployment rate moving nearly as high and predicted a more-modest 0.1 percentage points increase to 9.9%.
* Payroll declines continued to moderate as only firms only shed 190,000 jobs in October.
* In the private sector, goods producing payrolls declined 129,000 jobs as the construction sector shed 62,000 jobs and the manufacturing sector lost 61,000 jobs.
* The service-providing sector shed 61,000 jobs, but the news wasn't all bad. Professional and business service sector gained 18,000 jobs due to a huge jump in rehiring temporary workers. The education and health services industries increased their workforce by 45,000.
* The average workweek held steady at 33.0 hours and hourly earnings increased 0.3%.
Key Factors
* The knee-jerk thought to the rise in unemployment was that it had to be due to workers re-entering the workforce. However, that was not the case. The labor force declined by 31,000 people as 259,000 workers left the workforce over the last month.
* The jump in the unemployment rate was solely due to an increase in the unemployed. It was not from any statistical manipulations.
* However, the decline in payrolls would have been much worse if companies didn't start hiring temporary workers. Temp jobs increased 33,700 in October and other employment service jobs increased by 2,300. Without the massive increase in temporary workers, the drop in payrolls would have increased from September.
Big Picture
* Weekly claims for unemployment have to drop below 400,000 before payrolls will stabilize.
* Limited wage growth and declining payroll levels are a recipe for very poor consumer confidence and sluggish consumer spending.
Source: Briefing.com
