Insider Weekends – Revlon’s Chairman Mr. Perelman Adds to his Stake

Welcome to edition 379 of Insider Weekends. Insider buying increased last week with insiders purchasing $78.5 million of stock compared to $72.92 million in the week prior. Selling on the other hand decreased with insiders selling $1.02 billion of stock last week compared to $1.57 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 down to 13.04. In other words, insiders sold more than 13 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 21.51.

Insider Sell Buy Ratio September 22, 2017

Insider Sell Buy Ratio September 22, 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

Chairman of the Board, Ronald O. Perelman acquired 625,151 shares of this beauty care products company, paying $17.36 per share for a total amount of $10.85 million. These shares were purchased indirectly through MacAndrews & Forbes Incorporated and related entities.

We wrote the following after Mr. Perelman’s last set of purchases in August,

Revlon’s stock is down nearly 20% since Mr. Perelman’s previous purchase in June 2017. It is not entirely clear why Mr. Perelman keeps adding to his stake as the company saw a broad decline in both revenue and earnings when it reported second quarter results earlier this month. The only bright spot was the Elizabeth Arden segment, which saw a 3.4% increase in sales (5.4% excluding currency related impacts). Revlon completed its acquisition of Elizabeth Arden in September 2016 after paying $870 million for the company.

There is always the possibility that he might take Revlon private again since he already owns more than 80% of its stock.

Revlon’s second largest shareholder, Mittleman Brothers, was probably worried about Mr. Perelman taking the company private and wrote this letter to the CEO and the board urging them to obtain a standstill agreement from Mr. Perelman so that he does not increase his stake to 90% and then attempt to take the company private via a short-form merger.

Mr. Perelman responded on September 15th and according to this letter indicated,

MacAndrews & Forbes presently does not intend to increase its beneficial ownership above 89% of the issued and outstanding Revlon Class A Common Stock (“Common Stock”) or to undertake transactions to take Revlon private.
Should MacAndrews & Forbes determine to undertake transactions to increase its beneficial ownership above 89% of the issued and outstanding Common Stock or to take Revlon private, MacAndrews & Forbes agrees to:
(1) notify the Board at least 5 business days in advance of such transactions; and, prior to consummating such transactions,
(2) convene a Board meeting;
(3) support the creation of a special committee of independent directors empowered to select its own advisors; and
(4) negotiate with that special committee regarding the terms of such transactions by MacAndrews & Forbes, in order to promote the interests of all shareholders, including minority shareholders.
The agreement in this paragraph shall terminate on the first anniversary of the date hereof, unless extended in writing by MacAndrews & Forbes prior to such date.
For the avoidance of doubt, this letter should not be construed as an admission by MacAndrews & Forbes that any of the assertions made in the Mittleman Letter have any merit whatsoever.

The purchases highlighted in this article, happened less than a week after this letter was sent.

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

P/E: -9.06 Forward P/E: 9.48 Industry P/E: 12.23
P/S: 0.4 Price/Book: N/A EV/EBITDA: 12.06
Market Cap: $1.07B Avg. Daily Volume: 299,320 52 Week Range: $15.6 – $37.96

2. Pulse Biosciences, Inc. (PLSE): $15.02

Shares of this medical device company were acquired by 3 insiders:

  • 10% Owner Robert W. Duggan acquired 409.918 shares, paying $14.45 per share for a total amount of $5.92 million.
  • Director Maky Zanganeh acquired 29,775 shares, paying $13.36 per share for a total amount of $397,670. Mr. Zanganeh increased his stake by 9.84% to 332,500 shares with this purchase.
  • Director Mitchell E. Levinson acquired 3,835 shares, paying $12.30 per share for a total amount of $47,170. These shares were purchased indirectly by an immediate family member.

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

P/E: -13.74 Forward P/E: N/A Industry P/E: 12.23
P/S: N/A Price/Book: 8.91 EV/EBITDA: -14.65
Market Cap: $215.3M Avg. Daily Volume: 303,542 52 Week Range: $5.2 – $39.5

3. CrossAmerica Partners LP (CAPL): $27.41

Director Joseph V. Topper Jr. acquired 39,057 shares of this distributor of petroleum for motor vehicles, paying $27.52 per share for a total amount of $1.07 million. These shares were purchased indirectly by ERNJ, LLC.

You can view the list of recent insider transactions for CrossAmerica Partners LP here.

P/E: -1 Forward P/E: 54.82 Industry P/E: 12.23
P/S: 0.49 Price/Book: 5.05 EV/EBITDA: 20.47
Market Cap: $928.13M Avg. Daily Volume: 58,436 52 Week Range: $23.26 – $29.8

4. United Continental Holdings, Inc. (UAL): $58.8

Director Edward Shapiro acquired 15,000 shares of this airline, paying $59.87 per share for a total amount of $898,020. Mr. Shapiro increased his stake by 118.05% to 27,707 shares with this purchase.

You can view the list of recent insider transactions for United Continental Holdings, Inc. here.

P/E: 8.12 Forward P/E: 6.77 Industry P/E: 12.23
P/S: 0.48 Price/Book: 2.03 EV/EBITDA: 4.19
Market Cap: $17.89B Avg. Daily Volume: 4,535,796 52 Week Range: $49.28 – $83.04

5. Opko Health, Inc. (OPK): $6.71

Shares of this medical devices and drug development  company were acquired by 2 insiders:

  • CEO & Chairman Phillip Frost M.D. acquired 135,000 shares, paying $6.00 per share for a total amount of $810,510. These shares were purchased indirectly by by Frost Nevada Investments Trust.
  • Sr. Vice President, CFO Adam Logal acquired 1,500 shares, paying $6.03 per share for a total amount of $9,045. Mr. Logal increased his stake by 0.93% to 162,793 shares with this purchase.

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

P/E: -45.34 Forward P/E: -167.75 Industry P/E: 12.23
P/S: 3.17 Price/Book: 1.78 EV/EBITDA: N/A
Market Cap: $3.75B Avg. Daily Volume: 4,451,273 52 Week Range: $5.85 – $12.15

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $170.54

Shares of Facebook were sold by 3 insiders:

  • COB and CEO Mark Zuckerberg sold 247,452 shares for $171.75, generating $42.49 million from the sale. These shares were sold indirectly through various entities.
  • Chief Product Officer Christopher K. Cox sold 16,000 shares for $170.71, generating $2.73 million from the sale.
  • VP and General Counsel Colin Stretch sold 750 shares for $171.40, generating $128,551 from the sale.

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

P/E: 38.17 Forward P/E: 26.36 Industry P/E: 12.23
P/S: 14.93 Price/Book: 7.44 EV/EBITDA: N/A
Market Cap: $495.28B Avg. Daily Volume: 16,026,277 52 Week Range: $113.55 – $175.49

2. NVIDIA Corporation (NVDA): $179

Shares of this semiconductor company were sold by 3 insiders:

  • Director Harvey C. Jones sold 100,000 shares for $185.65, generating $18.57 million from the sale.
  • Director Mark A. Stevens sold 80,250 shares for $187.23, generating $15.02 million from the sale.
  • Director Tench Coxe sold 50,000 shares for $189.62, generating $9.48 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 51.48 Forward P/E: 45.43 Industry P/E: 12.23
P/S: 12.87 Price/Book: 17.98 EV/EBITDA: 37.03
Market Cap: $107.4B Avg. Daily Volume: 18,148,593 52 Week Range: $63.53 – $191.2

3. McKesson Corporation (MCK): $154.01

Chairman, President & CEO John H. Hammergren sold 225,000 shares of this health services and information technology company for $151.67, generating $34.13 million from the sale. 125,000 of these shares were sold indirectly through a trust and 100,000 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 McKesson Corporation here.

P/E: 6.99 Forward P/E: 11.93 Industry P/E: 12.23
P/S: 0.16 Price/Book: 2.86 EV/EBITDA: N/A
Market Cap: $32.38B Avg. Daily Volume: 1,593,190 52 Week Range: $114.53 – $169.29

4. Intuit Inc. (INTU): $146.32

Chair of Executive Committee Scott D. Cook sold 183,333 shares of this accounting and tax software company for $145.19, generating $26.62 million from the sale. These shares were sold indirectly through various trusts.

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

P/E: 39.33 Forward P/E: 26.27 Industry P/E: 12.23
P/S: 7.21 Price/Book: 27.78 EV/EBITDA: 22.11
Market Cap: $37.31B Avg. Daily Volume: 1,293,636 52 Week Range: $103.22 – $146.72

5. The Gap, Inc. (GPS): $28.36

Director William Sydney Fisher sold 666,849 shares of this apparel chain for $27.99, generating $18.67 million from the sale.

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

P/E: 13.51 Forward P/E: 13.5 Industry P/E: 12.23
P/S: 0.72 Price/Book: 3.77 EV/EBITDA: 5.29
Market Cap: $11.12B Avg. Daily Volume: 6,211,492 52 Week Range: $21.02 – $30.74

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

Disclaimer: I hold a long position in The Gap (GPS). 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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria

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