Insider Weekends – Ronald O. Perelman Adds To His Significant Revlon Stake

Welcome to edition 360 of Insider Weekends. Insider buying increased with insiders buying $143.26 million of stock compared to $106.38 million in the week prior. Selling declined sharply  with insiders selling $2.11 billion of stock last week compared to $4.63 million 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 14.7. In other words, insiders sold almost 15 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 43.28.

Insider Sell Buy Ratio May 12, 2017

Insider Sell Buy Ratio May 12, 2017

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. Revlon, Inc. (REV): $19.9

Director Ronald O. Perelman acquired 950,000 shares of this beauty care products company, paying $20.40 per share for a total amount of $19.38 million. These shares were purchased indirectly through MacAndrews & Forbes Incorporated and related entities.

Following this purchase Mr. Perelman’s holding company MacAndrews & Forbes Incorporated owns nearly 80% of Revlon. The holding company acquired Revlon for $1.8 billion and incurred other acquisition related costs of $900 million in 1985. Revlon once again became a publicly traded company in 1996. The stock dropped sharply earlier this month after Revlon reported disappointing first quarter results with sales declining 5.8% and a net loss of $6.6 million (adjusting for Revlon’s acquisition of Elizabeth Arden).

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

P/E: -47.04 Forward P/E: 9.48 Industry P/E: 68.89
P/S: 0.42 Price/Book: N/A EV/EBITDA: 12.18
Market Cap: $1.04B Avg. Daily Volume: 167,715 52 Week Range: $18.3 – $37.96

2. American Homes 4 Rent (AMH): $22.3

Director Tamara Hughes Gustavson acquired 462,123 shares of this real estate investment trust, paying $22.21 per share for a total amount of $10.26 million. Ms. Gustavson increased her stake by 3.52% to 13,600,665 shares with this purchase.

We have reported on purchases of American Homes 4 Rent several times in the past as insiders have been actively buying stock since 2013. We wrote the following after Director Wayne Hughes’ insider purchase in mid-2015 at much lower prices,

This is the third purchase (of) a million shares by Mr. Hughes we have reported on over the last six months. Following his purchase in December we mentioned,

“Mr. Hughes is the billionaire founder of Public Storage (PSA) and retired as the CEO of PSA in 2012. He founded the former manager of American Homes 4 Rent in 2011.”

For a REIT, the company has an unusually low yield of just 1.2%, when compared to the average yield of 3.27% of all residential equity REITs (PDF). The value most likely lies in the single family homes that company holds on its balance sheet as their timing in buying single family homes after the great recession was impeccable. The company trades at 1.05 times tangible book value.

Ms. Gustavson is Wayne Hughes’ daughter. Another interesting thing about this purchase is that it comes just a week after Ms. Gustavson sold $10.28 million worth of stock. Since her prior purchases were in November and December 2016 at much lower prices, her sales earlier this month would be subjected to the short-swing insider trading rule and require her to disgorge all profits from the trade back to the company. It is entirely possible that this purchase is related to that trade. You can check out all her insider trades across multiple companies here.

You can view the list of recent insider transactions for American Homes 4 Rent here.

P/E: -155.94 Forward P/E: 123.89 Industry P/E: 33.54
P/S: 7.64 Price/Book: 1.29 EV/EBITDA: 18.15
Market Cap: $7.01B Avg. Daily Volume: 2,014,828 52 Week Range: $17.12 – $23.98

3. Opko Health, Inc. (OPK): $7.19

Shares of this devices and drug development company were acquired by 3 insiders:

  • CEO & Chairman Phillip Frost M.D. acquired 1,235,000 shares, paying $6.99 per share for a total amount of $8.63 million. These shares were purchased indirectly by Frost Gamma Investments Trust.
  • Vice Chairman & CTO Jane Hsiao acquired 60,000 shares, paying $6.95 per share for a total amount of $417,205. Ms. Hsiao increased her stake by 0.24% to 24,773,133 shares with this purchase.
  • Executive VP-Administration Steven D. Rubin acquired 2,000 shares, paying $6.91 per share for a total amount of $13,814. Mr. Rubin increased his stake by 0.04% to 5,683,915 shares with this purchase.

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

P/E: -156.3 Forward P/E: 119.83 Industry P/E: 14.64
P/S: 3.28 Price/Book: 1.92 EV/EBITDA: 64.28
Market Cap: $4.02B Avg. Daily Volume: 4,375,319 52 Week Range: $6.65 – $12.15

4. Seritage Growth Properties (SRG): $40

Shares of this retail REIT were purchased by two insiders:

  • 10% owner Bruce R. Berkowitz purchased 185,900 shares , paying $40.52 per share for a total amount of $7.53 million. These shares were acquired in accounts managed indirectly by Mr. Berkowitz.
  • Director John McClain purchased 400 shares, paying $40.01 per share for a total amount of $16,004.

While Seritage has dropped over 13% during the last year when compared to a gain of 15% in the S&P 500 over the same time, it has fared better than most retail REITs. Most brick-and-mortar retail stocks along with retail REITs have been absolutely decimated over the last two years thanks to the convenience of Amazon on the one end and the loss of market share to value oriented retailers like TJX Companies (TJX), Ross Stores (ROST) and Costco (COST) on the other.

Mr. Berkowitz has been an active buyer of Seritage as we discussed earlier this year.

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

P/E: -24.38 Forward P/E: 18.35 Industry P/E: 28.48
P/S: 8.77 Price/Book: 1.57 EV/EBITDA: 14.56
Market Cap: $2.23B Avg. Daily Volume: 353,826 52 Week Range: $39.5 – $51.99

5. KITE PHARMA, INC. (KITE): $75.43

Shares of this biotech company were acquired by 5 insiders:

  • Director David Bonderman acquired 50,000 shares, paying $68.94 per share for a total amount of $3.45 million. These shares were acquired indirectly by the Bonderman Family Limited Partnership.
  • Chairman, President and CEO Arie Belldegrun acquired 17,000 shares, paying $68.57 per share for a total amount of $1.17 million. Mr. Belldegrun increased his stake by 24.81% to 85,507 shares with this purchase.
  • Director Ran Nussbaum acquired 9,832 shares, paying $69.11 per share for a total amount of $679,474. 7,200 of these shares were acquired by the Pontifax entities.
  • Chief Financial Officer Paul L. Jenkinson acquired 3,450 shares, paying $72.59 per share for a total amount of $250,426. Mr. Jenkinson increased his stake by 85.61% to 7,480 shares with this purchase. 3,000 of these shares were acquired indirectly through a trust.
  • Director Steven B. Ruchefsky acquired 1,400 shares, paying $69.50 per share for a total amount of $97,300. Mr. Ruchefsky increased his stake by 0.62% to 225,426 shares with this purchase.

You can view the list of recent insider transactions for KITE PHARMA, INC. here.

P/E: -13.82 Forward P/E: -12.13 Industry P/E: 122.35
P/S: 158.68 Price/Book: 8.83 EV/EBITDA: -11.23
Market Cap: $4.27B Avg. Daily Volume: 1,775,095 52 Week Range: $39.82 – $88.58

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

Notable Insider Sales:

1. GODADDY INC. (GDDY): $38.76

Shares of this Internet Software & Services company were sold by 6 insiders:

  • Director Robert R. Parsons sold 8,015,760 shares for $37.44, generating $300.12 million from the sale. These shares were sold indirectly by YAM Special Holdings.
  • Director Greg Mondre sold 7,985,084 shares for $37.44, generating $298.97 million from the sale.
  • 10% Owner Jay C. Hoag sold 3,609,511 shares for $37.44, generating $135.14 million from the sale. These shares were sold indrectly by TCV Member Fund.
  • EVP – General Counsel Nima Kelly sold 39,602 shares for $39.40, generating $1.56 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Executive Officer Blake Irving sold 37,500 shares for $39.11, generating $1.47 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Marketing Officer Barbara J. Rechterman sold 35,000 shares for $39.02, generating $1.37 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

GoDaddy has had a great run since its IPO last year and it makes sense that insiders are cashing in on the success. We normally don’t focus much on insider sales but do pay attention to any trades by Jay C. Hoag of the venture capital firm Technology Crossover Ventures as his track record is impeccable, especially when it comes to Netflix. We wrote the following after his purchase of Netflix in July 2016,

TCV is a well known venture capital company that mostly invests in private companies but sometimes ventures into public markets. The company first invested in Netflix (NFLX) back in 1999 and Mr. Hoag’s purchase of Netflix shares in May 2012 at prices in the low $70′s (pre-split) were one of the best instances of insider purchases I have seen since I started tracking this data more than 5 years ago. Netflix shares had dropped dramatically before Mr. Hoag’s purchases on news that the company was going to split itself a DVD mailing service called Qwikster and a streaming service. Much to the relief of investors, the company eventually abandoned that plan and the stock eventually went up 10 fold. Unfortunately for TCV, they did not hold through that entire 1,000%+ increase.

We also reported on Mr. Hoag’s purchases of Zillow (Z) earlier this year on behalf of TCV at an average price of $19.98. The stock has almost doubled since his purchase five months ago.”

You can view the list of recent insider transactions for GODADDY INC. here.

P/E: -184.57 Forward P/E: 42.13 Industry P/E: 20.04
P/S: 3.42 Price/Book: 6.1 EV/EBITDA: 18.97
Market Cap: $6.5B Avg. Daily Volume: 1,138,407 52 Week Range: $28.13 – $40.27

2. Parsley Energy (PE): $31.91

Shares of this independent oil and natural gas company were sold by 2 insiders:

  • Chairman and Chief Executive Officer Bryan Sheffield sold 1,687,500 shares for $31.42, generating $53.03 million from the sale.
  • Executive Vice President-Chief Financial Officer Ryan Dalton sold 30,000 shares for $32.56, generating $976,800 from the sale.

You can view the list of recent insider transactions for Parsley Energy here.

P/E: -69.37 Forward P/E: 25.13 Industry P/E: 22.71
P/S: 15.33 Price/Book: 2.74 EV/EBITDA: 20.84
Market Cap: $9.14B Avg. Daily Volume: 4,760,204 52 Week Range: $24.12 – $39.82

3. Apple Inc. (AAPL): $156.1

Shares of Apple were sold by 3 insiders:

  • Senior Vice President Angela J. Ahrendts sold 100,377 shares for $149.56, generating $15.01 million from the sale.
  • SVP, Gen’l Counsel, Secretary Bruce D. Sewell sold 67,500 shares for $148.76, generating $10.04 million from the sale.
  • Director Arthur D. Levinson sold 35,000 shares for $153.88, generating $5.39 million from the sale. These shares were sold as a result of result of exercising options immediately prior to the sale.

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

P/E: 18.74 Forward P/E: 15.18 Industry P/E: 14.47
P/S: 3.69 Price/Book: 6.2 EV/EBITDA: 11.97
Market Cap: $813.88B Avg. Daily Volume: 24,631,211 52 Week Range: $91.5 – $156.42

4. Cerner Corporation (CERN): $64.36

Shares of this healthcare information technology supplier were sold by 2 insiders:

  • Vice Chairman Clifford W. Illig sold 234,525 shares for $64.43, generating $15.11 million from the sale. These shares were sold indirectly through a trust.
  • Chairman and CEO Neal L. Patterson sold 180,667 shares for $64.71, generating $11.69 million from the sale. 20,586 of these shares were sold as a result of exercising options immediately prior to the sale.

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

P/E: 33.18 Forward P/E: 23.23 Industry P/E: 45.55
P/S: 4.41 Price/Book: 5.16 EV/EBITDA: 15.85
Market Cap: $21.27B Avg. Daily Volume: 2,792,552 52 Week Range: $47.01 – $67.5

5. Tyler Technologies, Inc. (TYL): $167.22

Director Larry D. Leinweber sold 134,415 shares of this information management solutions and services provider for $165.68, generating $22.27 million from the sale. These shares were sold indirectly through various trusts.

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

P/E: 52.57 Forward P/E: 37.92 Industry P/E: 46.14
P/S: 7.99 Price/Book: 6.41 EV/EBITDA: 36.27
Market Cap: $6.2B Avg. Daily Volume: 195,176 52 Week Range: $139.61 – $175.77

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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