Eduardo Cue, known as Eddy, is a big man at Apple Inc. (AAPL, Financial).
He is in charge of the iTunes store, the iBooks store, and Apple Music, among other things. As senior vice president of Internet Software and Services, he reports directly to CEO Tim Cook.
So, what are we to make of the fact that Cue has sold more than $42 million of Apple stock this year?
One can argue that sales of this kind are not a bearish sign. Cue’s livelihood is dependent on Apple; why should his stock portfolio be too?
Also, Cue’s supply of Apple stock may be replenished by the exercise of stock options – either ones he already has or ones he fully expects to get.
Those aren’t bad arguments but I’ll say this: There is no way a big insider sale is a bullish sign.
Apple’s Slowdown
I’ve recommended Apple stock in this column at times in the past, but I don’t like it as much now.
To be sure, the company still has many strengths: able executives, a big cash hoard, and wonderful products.
But Apple doesn’t look like the juggernaut it recently was. Operating earnings grew an average of 40% a year in the past ten years. In the past year, they fell 11%.
The company was debt free through fiscal 2012. Today debt is 68% of stockholders’ equity, which is just middle-of-the-pack.
Acushnet
R. Walter Uihlein, the CEO of Acushnet Holdings Corp. (GOLF, Financial), spend $1.19 million on November 2 to add to his store of Acushnet stock. Altogether he owns 702,196 shares, worth $14.4 million at the Nov. 30 price of $19.96 a share.
Based in Fairhaven, Massachusetts, Acushnet makes golf balls, clubs and other gear under the Titleist brand, and golf clothing under the FootJoy brand.
On the same day as Uihlein made his jumbo purchase, five other Acushnet insiders bought smaller amounts.
Such cluster buying is a good sign more often than not. And I like the Uihlein purchase because buys by CEOs tend to have more predictive value than buys by lesser corporate officers.
Acushnet is a brand-new public company. It made its initial public offering in late October. But Titleist is a brand familiar to all golfers, many of whom are fond of it. And while there’s no earnings history as a public company, the stock sells for only 0.28 times revenue, a ratio I like.
Skechers
I also recommend Skechers USA Inc. (SKX, Financial), which makes casual shoes, boots, sneakers and sandals. Based in Manhattan Beach, California, the company is run by the father-son team of Robert and Michael Greenberg.
The Greenberg’s made their name with LA Gear, which soared, then fizzled. Like LA Gear, Skechers has used aggressive business strategies and sexy advertising. But Skechers has lasted better.
The company has shown a profit in 13 of the past 15 years. Lately, growth has accelerated. In the past four quarters, its revenue increased nearly 17%, and operating earnings rose almost 20%.
Data on consumer spending have been looking good, so I think there’s a good chance Skechers continues to streak. The stock is moderately valued at 13 times earnings.
Insider Series
I’ve written 40 columns on the subject of insider buys and sells over the years. I’ve tabulated the results for 30 of them – all those written from February 1999 to December 2015.
I have recommended 57 stocks on the basis of insider buying and they have beaten the Standard & Poor’s 500 by an average of 6.5 percentage points.
For 18 stocks, I commented on insider buying but said to avoid the stock. Those have trailed the S&P 500 by 25 percentage points.
For nine stocks, I noted insider buying but didn’t make a clear recommendation. Those have beaten the index by 15.9 points.
For 21 stocks, I wrote about insider selling. Those have trailed the index but only by 0.05 percentage point.
Bear in mind that my column recommendations are theoretical and don’t reflect actual trades, trading costs or taxes. Their results shouldn’t be confused with the performance of portfolios I manage for clients. And past performance doesn’t predict future results.
Correction: In last week’s column, I mistakenly said that Ruth’s Hospitality Group Inc. runs two fish chains and three steak chains. Actually, it sold off its other subsidiaries some time back to concentrate on its flagship Ruths Chris Steak House.
Disclosure: I have no holdings in the stocks discussed in this week’s column, and no plans to establish holdings in the next three days.
