Insider Weekends – Carl Icahn Once Again Adds to his Herbalife Stake

Welcome to edition 352 of Insider Weekends. Insider buying increased with insiders buying $127.49 million of stock compared to $93.85 million in the week prior. Selling decreased with insiders selling $2.46 billion of stock last week compared to $2.89 billion in the week prior.

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 19.31. In other words, insiders sold more than 19 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 30.87.

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. Herbalife Ltd. (HLF): $56.45

10% Owner Carl C. Icahn acquired 372,324 shares of this nutrition company, paying $51.35 per share for a total amount of $19.12 million. These shares were purchased indirectly through various entities.

We sometimes make exceptions and highlight insider purchases by 10% owners and decided to make an exception in this case. The purchase stood out because Bill Ackman capitulated last week and sold his entire long position in Valeant Pharmaceuticals (VRX) at a huge loss. Mr. Ackman is however still short Herbalife and his billion dollar bet against Herbalife is the subject of a documentary called Better on Zero that hit movie theaters last week. The timing of Mr. Icahn’s purchase could either be to signal his continued confidence in the company or the start of a short squeeze on Ackman.

Mr. Icahn’s purchase of Herbalife last August prompted us to write:

We don’t often comment on purchases by 10% owners but this one was much too interesting to ignore and was another volley in the long-standing battle between Bill Ackman on the short side and Carl Icahn on the long side. Herbalife’s stock opened weak on Friday and at one point during the day was down almost 7.8% on news that Carl Icahn was considering selling his large stake in the company and that Bill Ackman had been approached to buy a large block of stock. As the day progressed, the stock recovered some of those losses. After the market closed, Mr. Icahn filed a form 4 indicating he had actually purchased an additional 2.3 million shares and released this statement.

It has been over two years since we wrote the following about the company after a trio of insider purchases at Herbalife.

“Herbalife is currently caught in the cross-fire between longs and passionate short-sellers like Bill Ackman who claim the stock is headed to zero and believe the company is a criminal enterprise. Following Ackman’s latest three hour presentation on the company,  the stock shot up more than 25% only to give back all of those gains and then some after the company reported weak second quarter results last week.”

A series of tweets between an investor who is well know for his wit and an Australian hedge fund manager who is long Herbalife provides some additional color (warning: a lot of profanity in this tweet exchange).

You can view the list of recent insider transactions for Herbalife Ltd. here.

2. Calavo Growers, Inc. (CVGW): $58.3

Chairman of the Board and CEO Lecil E. Cole acquired 95,000 shares of this avocado and food products company, paying $56.42 per share for a total amount of $5.36 million. Mr. Cole increased his stake by 20.34% to 561,981 shares with this purchase.

You can view the list of recent insider transactions for N/A here.

3. Tandy Leather Factory, Inc. (TLF): $7.75

Director James C. Pappas acquired 482,409 shares of this retailer and a wholesale distributor of a range of leather and related products, paying $7.25 per share for a total amount of $3.49 million. These shares were purchased indirectly by JCP Investment Partnership.

You can view the list of recent insider transactions for Tandy Leather Factory, Inc. here.

4. Compass Diversified Holdings LLC (CODI): $16.5

Shares of this private equity firm were purchased by two insiders:

• Director and Chief Executive Alan B. Offenberg acquired 150,000 shares, paying $16.63 per share for a total amount of $2.49 million.
• Assistant Secretary Elias Sabo acquired 50,000 shares, paying $16.69 per share for a total amount of $834,500.

You can view the list of recent insider transactions for Compass Diversified Holdings LLC here.

5. Seritage Growth Properties (SRG): $44.42

10% owner Bruce R. Berkowitz purchased 53,200 shares of this retail REIT, paying $45.55 per share for a total amount of $2.42 million. These shares were acquired in accounts managed indirectly by Mr. Berkowitz.

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

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

Notable Insider Sales:

1. Wal-Mart Stores, Inc. (WMT): $69.89

Director S. Robson Walton sold 3,000,000 shares of Wal-Mart for $70.50, generating $211.49 million from the sale. These shares were sold indirectly from the Walton Family Holdings Trust.

You can view the list of recent insider transactions for Wal-Mart Stores, Inc. here.

2. Facebook, Inc. (FB): $139.84

Shares of Facebook were sold by 4 insiders:

• Director Jan Koum sold 2,123,302 shares for $140.02, generating $297.31 million from the sale. These shares were sold indirectly through a trust.
• Chief Operating Officer Sheryl Sandberg sold 327,000 shares for $139.26, generating $45.54 million from the sale. These shares were sold indirectly through a trust.
• Chief Technology Officer Michael Todd Schroepfer sold 37,949 shares for $138.90, generating $5.27 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• VP and General Counsel Colin Stretch sold 750 shares for $139.21, generating $104,406 from the sale.

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

3. Ulta Beauty, Inc. (ULTA): $288.81

Shares of this beauty products retailer were sold by 2 insiders:

• Director Robert F. DiRomualdo sold 50,000 shares for $285.15, generating $14.26 million from the sale. These shares were sold indirectly by Naples Ventures LLC.
• Director Dennis K. Eck sold 20,000 shares for $287.57, generating $5.75 million from the sale.

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

4. Newell Brands Inc. (NWL): $48.42

Shares of this marketer of consumer and commercial products were sold by 2 insiders:

• Director Martin E. Franklin sold 340,000 shares for $48.34, generating $16.43 million from the sale.
• Director Ian G. H. Ashken sold 51,000 shares for $48.27, generating $2.46 million from the sale.

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

5. Glaukos Corporation (GKOS): $48.89

Director Jonathan Silverstein sold 382,538 shares of this ophthalmic medical technology company for $45.33, generating $17.34 million from the sale. These shares were sold indirectly by OrbiMed Private Investments.

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

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

Disclaimer: 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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