A recent article on SA is a bit negative on the stock mainly because of selling by insiders. The author mentions that 244K shares have been sold by insiders in 2013, while there has been no instance of insider purchasing. However, considering the trading volumes, low level of insider ownership and low volume of sales by insiders, one cannot take this as a reason for being negative on Actavis. Insiders sell their stock for various reasons, and one cannot conclude that they are negative about the prospects of the company. Insider buying, on the other hand, can be attributed to positive outlook, and there have been recent cases where such purchases have correctly predicted increase in momentum. OPKO Health (OPK) and Biozone Pharmaceuticals (BZNE) have recently moved up exponentially backed by insider support (Dr. Phillip Frost). For Actavis, the performance has been great, and the stock has moved by around 70% in 2013. Even over the longer term, the returns have been good. It has appreciated by more than 560% over the last 5 years. The momentum is backed by the company's expansion efforts over the last few years through acquisition. It has increased its global presence in various markets, and according to Zacks, the recently concluded $8.5 billion stock-for-stock Warner Chilcott acquisition has increased the size and presence of the company significantly. The deal has resulted in the creation of a leading global specialty pharmaceutical company with combined annual revenues of about $11 billion. The joint entity holds the third position in the U.S. specialty pharmaceutical market with annual revenues of about $3 billion. The deal will help in increasing the EPS significantly in 2014, and the cash flow will improve. This will help the company in reducing its debt. There are also expectations of post-tax operational synergies and related cost reductions and tax savings of more than $400 million.
I think the selling by insiders might be related to the government shutdown and the debt ceiling issue. Being prudent with so much money at stake is wise. I would not change my views on the stock. This is a $300 stock. IMHO
According to the SA article:
there have been zero shares purchased by insiders this year.
Insider selling by calendar month
Here is a table of Actavis' insider-trading activity by calendar month.
Month Insider selling / shares Insider buying / shares
September 2013 29,013 0
August 2013 196,271 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 0 0
March 2013 23,913 0
February 2013 0 0
January 2013 0 0
There have been 244,097 shares sold and there have been zero shares purchased by insiders this year.
I need to learn how to read those form 4K's better. There's (A)acquired, (D)disposed, (S)sold, bought, etc. Can't the headlines say what the insiders are doing. Now that I think about it acquired probably means given. It doesn't seem right there are articles saying it is overvalued. After looking at a lot of stocks this past week I can't think of one that was not said to be overvalued and that people over reacted to the acquisition of Warner Chilcott. Going into earnings next week, I'm not sure how to play my position. I feel like it will continue to trade in the same way it always has.
There has been insider buying. I always allow myself the right to be wrong, but there has been both. When the companies merged officially earlier in the month, there was huge insider buying by tons of the insiders. I would be curious what others thought on this. I appreciate your post.