Insider Weekends – Michael Dell Buys Shares of Dell Technologies

Welcome to edition 343 of Insider Weekends. Insider buying increased last week with insiders buying $27.16 million of stock compared to $3.96 million in the week prior. Selling declined with insiders selling $497.16 million of stock last week compared to $523.98 million in the week prior. About a fourth of the purchases was related to Micheal Dell acquiring $7 million worth of Dell’s tracking stock (DVMT) for VMWare (VMW) as discussed below.

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 dropped to 18.31. In other words, insiders sold more than 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 132.19.

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. Dell Technologies Inc. (DVMT): $58.17

Chief Executive Officer Michael S. Dell acquired 254,545 shares of this VMWare tracking stock, paying $27.50 per share for a total amount of $6.99 million. Mr. Dell increased his stake by 781.41% to 287,120 shares with this purchase.

At first glance we decided to exclude this purchase from the Insider Weekends post this week because the price of $27.50 is nowhere close to the $58.17 price of the publicly traded class V common shares. Looking at the form 4 filing, the purchase was of class C common stock and that explains the price difference. However I was intrigued by what was going on with the class V common shares that were issued by Dell to represent their stake in VMWare when the company acquired EMC.

Tracking stocks, as their name implies, generally tend to trade at a discount to the stocks they are supposed to track but you would expect both of them to be highly correlated. As you can see from the following chart, since this tracking stock started trading last August, it had outpaced the performance of VMWare by nearly 20%. One of the reasons for this divergence could be the greater than 30% discount that DVMT started trading at when the EMC acquisition was complete. The Barron’s story New Tracking Stock Offers Cheap Play on VMware does a great job of explaining this discount. So while VMWare has gone up more than 15% over the last five months, DVMT is up even more because it has partially closed the gap on the huge discount it was trading at. While the discount has narrowed, it still remains much bigger than the discount offered to most tracking stocks by the market and I plan on adding this stock to my watch list.

You can view the list of recent insider transactions for Dell Technologies Inc. here.

2. Seritage Growth Properties (SRG): $39.8

10% Owner Bruce R. Berkowitz acquired 140,600 shares of this real estate investment trust, paying $39.92 per share for a total amount of $5.61 million.

We normally exclude purchases by 10% owners but decided to once again make an exception for this purchase by Bruce Berkowitz on behalf of The Fairholme Fund. Seritage was spun out of Sears (SHLD) in mid-2015 and made headlines a few months later when Warren Buffett disclosed an 8% stake in the company. Mr. Berkowitz has consistently purchased shares of Seritage every few months since it went public.

You can view the list of recent insider transactions for Seritage Growth Properties here.

3. American Outdoor Brands Corporation (AOBC): $20.6

Shares of this firearm products and accessories manufacturer were acquired by 2 insiders:

• President and CEO James P. Debney acquired 30,000 shares, paying $20.82 per share for a total amount of $624,700. Mr. Debney increased his stake by 8.87% to 368,272 shares with this purchase.
• See Remarks Jeffrey D. Buchanan acquired 10,000 shares, paying $20.92 per share for a total amount of $209,200. Mr. Buchanan increased his stake by 12.50% to 90,013 shares with this purchase.

You can view the list of recent insider transactions for American Outdoor Brands Corporation here.

4. NiSource Inc. (NI): $21.96

Director Michael E. Jesanis acquired 12,000 shares of this natural gas and electricity provider, paying $22.53 per share for a total amount of $270,360. Mr. Jesanis increased his stake by 81.49% to 26,725 shares with this purchase.

You can view the list of recent insider transactions for NiSource Inc. here.

5. City Office REIT, Inc. (CIO): $12.42

Director Jeffrey David Kohn acquired 20,161 shares of this office REIT, paying $12.40 per share for a total amount of $249,996. Mr. Kohn increased his stake by 9.90% to 223,861 shares with this purchase.

You can view the list of recent insider transactions for City Office REIT, Inc. here.

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Barracuda Networks, Inc. (CUDA): $24.21

Shares of this security and storage solutions provider were sold by 3 insiders:

• Chief Marketing Officer & EVP Michael D. Perone sold 1,311,350 shares for $24.54, generating $32.18 million from the sale.
• 10% Owner Dean M. Drako sold 320,000 shares for $23.89, generating $7.65 million from the sale.
• Chief Executive Officer William D. Jenkins sold 16,500 shares for $24.74, generating $408,273 from the sale.
• VP, General Counsel, Secretary Diane Honda sold 3,593 shares for $25.50, generating $91,622 from the sale.

You can view the list of recent insider transactions for Barracuda Networks, Inc. here.

2. Facebook, Inc. (FB): $128.34

Shares of Facebook were sold by 4 insiders:

• Chief Operating Officer Sheryl Sandberg sold 109,000 shares for $119.68, generating $13.04 million from the sale. 52,404 of these shares were acquired upon the conversion of Class B Common Stock to Class A Common Stock in connection with the exercise of the stock options.
• Chief Technology Officer Michael Todd Schroepfer sold 37,994 shares for $124.79, generating $4.74 million from the sale. 66,256 of these shares were acquired upon the conversion of Class B Common Stock to Class A Common Stock in connection with the exercise of the stock options.
• Chief Product Officer Christopher K. Cox sold 16,000 shares for $121.03, generating $1.94 million from the sale.
• VP and General Counsel Colin Stretch sold 750 shares for $124.82, generating $93,615 from the sale.

You can view the list of recent insider transactions for Facebook, Inc. here.

3. Acacia Communications, Inc. (ACIA): $61.15

Shares of this high-speed coherent interconnect products provider were sold by 6 insiders:

• VP of Hardware and Software Mehrdad Givehchi sold 77,598 shares for $61.16, generating $4.75 million from the sale. 33,400 of these shares were sold indirectly by Givehchi LLC.
• VP Digital Signal Proc&Optics Christian J. Rasmussen sold 77,526 shares for $61.16, generating $4.74 million from the sale.
• Chief Technology Officer Benny P. Mikkelsen sold 77,526 shares for $61.15, generating $4.74 million from the sale.
• Vice President of Engineering Bhupendra C. Shah sold 39,180 shares for $61.16, generating $2.39 million from the sale. These shares were sold indirectly through a trust.
• President & CEO Murugesan Shanmugaraj sold 30,000 shares for $60.99, generating $1.83 million from the sale. 12,800 of these shares were sold indirectly through various trusts.
• Corporate Controller Francis J. Murphy sold 17,157 shares for $60.43, generating $1.04 million from the sale.

You can view the list of recent insider transactions for Acacia Communications, Inc. here.

4. Costco Wholesale Corporation (COST): $161.86

Shares of this warehouse retailer were sold by 4 insiders:

• Director James D. Sinegal sold 65,000 shares for $164.07, generating $10.66 million from the sale. These shares were sold indirectly by LLC.
• Executive VP Paul G. Moulton sold 14,189 shares for $161.98, generating $2.29 million from the sale.
• Executive VP Dennis R. Zook sold 7,000 shares for $161.12, generating $1.13 million from the sale. These shares were sold indirectly through a trust.
• Executive VP Roland Michael Vachris sold 3,180 shares for $161.73, generating $514,302 from the sale.

You can view the list of recent insider transactions for Costco Wholesale Corporation here.

5. ServiceNow, Inc. (NOW): $83.53

Director Frederic B. Luddy sold 154,000 shares of this software-as-a-service provider for $83.22, generating $12.82 million from the sale. These shares were sold indirectly through various trusts.

You can view the list of recent insider transactions for ServiceNow, Inc. here.

You can view the full list of sales from this Insider Sales page.

Disclaimer: I hold a long position in Sears Holdings (SHLD). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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