The Tycoon Report

Insider Buys and Sells: Weekly Wrap-Up

Tuesday, May 27, 2008 | Tycoon Staff

For all the analysts and pundits in the financial media, there is still no better judge of a company's health and future prospects than the owners and executives of those companies themselves.

That's why insider buying and selling is a critical piece of data that is monitored by people who invest for a living.

As part of our continuing effort 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 a weekly re-cap of the past week's activity.  We publish this re-cap every Monday, and it can be accessed in your email issues or on the Tycoon Report website.

Very important note:  While these Monday re-caps are available on the Tycoon Report website, if you want the most timely information we provide on insider buying and selling you've got to be sure and read the email issues that we send each weekday morning.

BUYS

FBL Financial Group Inc. (FFG)

So far in May, the Iowa Farm Bureau Federation has BOUGHT about $7 million worth of FFG stock.

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Youbet.Com Inc. (UBET)

Company director Michael Brodsky PURCHASED more than $2.2 million in UBET stock.

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Liberty Media Corp. (LCAPA)

Senior VP David Flowers has BOUGHT just over $1.2 million worth of LCAPA stock.

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Enterprise GP Holdings L.P. (EPE)

EPE Chairman Dan Duncan has BOUGHT just under $930,000 worth of company stock.

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Prospect Capital Corp. (PSEC)

CEO John Barry has BOUGHT $778,000 in PSEC stock.

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Orbitz Worldwide, Inc. (OWW)

Par Investment Partners has PURCHASED more than $1.5 million in OWW stock.

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Electronic Arts, Inc. (ERTS)

The video game company's CEO has BOUGHT nearly $1 million worth of ERTS stock.

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GLG Partners, Inc. (GLG)

CEO Noam Gottesman has BOUGHT 1 million shares of GLG for just over $8.1 million.

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Cash America International, Inc. (CSH)

President of Internet Services at CSH has BOUGHT more than $2 million worth of company stock.

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Extra Space Storage Inc. (EXR)

The CEO and the President of EXR each BOUGHT 60,000 shares in the company for $981,000 each.

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Campbell Soup Co. (CPB)

Company Director George Strawbridge Jr. has BOUGHT just over $1 million worth of CPB stock.

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SELLS

Microsoft Corp. (MSFT)

This month alone, Bill Gates has SOLD just under $300 million in company stock.

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Bally Technologies, Inc. (BYI)

The gaming company's CEO has SOLD nearly $11 million worth of BYI this month.

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Global Industries Ltd. (GLBL)

10% owner William Dore has SOLD nearly $4.3 million worth of GLBL stock.

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Watson Wyatt Worldwide, Inc. (WW)

CEO John Haley has SOLD over $1.9 million in WW stock.

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Cisco Systems Inc. (CSCO)

An EVP at Cisco has SOLD $3.1 million in company stock.

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Capital One Financial Corp. (COF)

CEO Richard Fairbank has SOLD just over $1.5 million worth of COF stock.

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Exxon Mobil Corp. (XOM)

A VP/General Counsel has SOLD just over $1 million in XOM stock.

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Pharmaceutical Product Development Inc. (PPDI)

CEO Fred Eshelman has SOLD nearly $6.5 million worth of PPDI stock.

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Apache Corp. (APA)

EVP Roger Plank has SOLD more than $1.3 million in APA stock.

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Anheuser Busch Companies, Inc. (BUD)

The CFO has SOLD nearly $2.6 million worth of BUD stock.

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Mark Your Economic Calendar: What's ahead for the week of May 27, 2008
Economic Calendar for the Week of May 26 - May 30

Tuesday, May 27

10:00AM - Consumer Confidence

Release Details

• Importance (A-F): This release merits a B-.
• Source: The Conference Board.
• Release Time: 10:00 ET on the last Tuesday of the month (data for current month).
• Raw Data Available At: http://www.tcb-indicators.org/.

The Conference Board conducts a monthly survey of 5000 households to ascertain the level of consumer confidence. The report can occasionally be helpful in predicting sudden shifts in consumption patterns, though most small changes in the index are just noise. Only index changes of at least five points should be considered significant. The index consists of two subindexes - consumers' appraisal of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index.

10:00AM - New Home Sales

Release Details

• Importance (A-F): This release merits a C .
• Source: The Census Bureau of the Department of Commerce.
• Release Time: 10:00 ET around the last business day of the month (data for month prior).
• Raw Data Available At: http://www.census.gov/const/newressales.pdf .

The report indicates the level of new privately owned one-family houses sold and for sale. New home sales usually have a lagged reaction to changing mortgage rates. They also tend to be stronger early in the business cycle when pent-up demand is strong, and they fade later in the cycle as the demand for housing is sated. In addition to home sales, the market monitors the number of homes for sale relative to the current sales pace. As this inventory measure falls (rises), housing starts tend to rise (fall). Finally, the median home price provides an indication of inflation in the housing sector, though only year/year changes provide any meaningful information.

The home sales report is quite volatile and subject to huge revisions, making any one month's reading very unreliable. The report rarely prompts a market reaction. The market prefers the existing home sales report, which has a sample data pool four times as large and is released earlier in the month.


Wednesday, May 28

8:30AM - Durable Orders

Release Details

• Importance (A-F): This release merits a B.
• Source: The Census Bureau of the Department of Commerce.
• Release Time: 8:30 ET around the 26th of the month (data for month prior).
• Raw Data Available At: http://www.census.gov/ftp/pub/indicator/www/m3/index.htm.

The durable orders release measures the dollar volume of orders, shipments, and unfilled orders of durable goods (defined as goods whose intended lifespan is three years or more). Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report despite the volatility and large revisions that make it a less than perfect indicator. These problems can be minimized by looking at the breakdown of orders. The total number is often skewed by huge increases in aircraft and defense orders. An increase based solely on strength in one sector tends to be discounted, while the market is more impressed with broad based increases in orders.

Also notable in this report is the narrow category of non-defense capital goods. These goods mirror the GDP category producers' durable equipment (PDE) -- the largest component of business investment. Shipments of non-defense capital goods are a good proxy for PDE in the current quarter, while nondefense capital goods orders provide an indication of PDE growth in the quarters ahead.


Thursday, May 29

8:30AM - GDP and Chain Deflator-Preliminary

Release Details

• Importance (A-F): This release merits a B.
• Source: Bureau of Economic Analysis, U.S. Department of Commerce.
• Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
• Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm.

Gross Domestic Product (GDP) is the the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totaling roughly 2/3rds of GDP.

In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.

With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.

Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.

8:30AM - Initial Claims

Release Details

• Importance (A-F): This release merits a C .
• Source: The Employment and Training Administration of the Department of Labor.
• Release Time: 8:30 ET each Thursday (data for week ended prior Saturday).
• Raw Data Available At: http://www.dol.gov/opa/media/press/eta/main.htm.

Initial jobless claims measure the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signaling slowing (accelerating) job growth. On a week-to-week basis, claims are quite volatile, and many analysts therefore track a four week moving average to get a better sense of the underlying trend. It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth.

There are two other statistics in this report -- the number of people receiving state benefits and the insured unemployment rate; neither is watched closely by the market. Some analysts track the number of people receiving state benefits from month to month as a guide for job growth, though this series has a poor track record in predicting the monthly employment report. The insured unemployment rate changes little on a weekly basis and is never a factor for the market.


Friday, May 30

8:30AM - Personal Income, Personal Spending, PCE Core Inflation

Release Details

• Importance (A-F): This release merits a C .
• Source: The Bureau of Economic Analysis of the Department of Commerce.
• Release Time: 8:30 ET around the first business day of the month (data for two months prior).
• Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm -- see personal income release.

Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.

The income report also includes a section covering personal consumption expenditures, also known as PCE. PCE is comprised of three categories: durables, non-durables, and services. The retail sales report will provide a good read on durable and nondurable consumption, while service purchases tend to grow at a fairly steady pace, making this a relatively predictable report, and ranking it well below retail sales in terms of market importance.

9:45AM - Chicago PMI

Release Details

• Importance (A-F): The Chicago PMI merits a B.
• Source: Chicago Purchasing Managers Association.
• Release Time: Last business day of the month at 10 ET for the current month.

In Brief

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. A few, such as the Atlanta and Richmond Fed surveys, are released after the ISM and are of little value. The purchasing managers' reports are measured like the national ISM -- 50% marks the breakeven line between an expanding and contracting manufacturing sector. For the New York, Philadelphia and Atlanta Fed indexes, 0 is the break-even mark. These surveys can be of some help in forecasting the national ISM.

In Depth

The market has been bombarded with a bevy of surveys purporting to measure manufacturing activity in every nook and cranny of the country. First it was Philadelphia, then Chicago, and Detroit, Milwaukee, New York, Cincinnati, Richmond, Atlanta, Boston, and there might as well have been a Nome survey. This hodge-podge of releases is begging for someone - namely us - to come along and cut this group down to a more manageable size.

10:00AM - U. of Michigan Consumer Sentiment-Revised

Release Details

• Importance (A-F): This release merits a B-.
• Source: The University of Michigan.
• Release Time: Preliminary: 10:00 ET on the second Friday of the month (data for current month); Final: 10:00 ET on the fourth Friday of the month (data for current month).

The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading. Like the Conference Board index, it has two subindexes - expectations and current conditions. The expectations index is a component of the Conference Board's Leading Indicators index.