Insider Weekends – CEO of BABY Buys Stock

Welcome to edition 328 of Insider Weekends. Insider buying plunged last week with insiders buying $21.22 million of stock compared to $69.44 million in the week prior. Selling on the other hand increased significantly with insiders selling $1.53 billion of stock last week compared to $787.01 million in the week prior. Over a third of this selling was related to Bain Capital exiting its stake in Trinseo (TSE).

Considering we were at the end of the third quarter and hence a “quiet period” for most companies, we were expecting very few insider transactions both on the buy side and the sell side. We are a little surprised by the increase on the sell side even after taking out the TSE transaction. With the S&P 500 up more than 3% last quarter and close to all time highs, the increase in inside selling probably shouldn’t be that big a surprise.

On a related note, I got a chance to dig deeper into a company that saw insider buying last month and you can read my thoughts about it in an article titled Norwegian Cruise Line: Time To Take A Luxury Cruise?.

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 went up to 71.95. In other words, insiders sold  almost 72 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 11.33. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Insider Sell Buy Ratio September 30, 2016

Insider Sell Buy Ratio September 30, 2016

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. Patheon Holdings Coöperatief U.A. (PTHN): $29.63

Director Paul S. Levy acquired 15,000 shares of this pharmaceutical development and manufacturing services provider, paying $29.64 per share for a total amount of $444,550. These shares were purchased indirectly by Great Point Ventures, LLC.

You can view the list of recent insider transactions for Patheon Holdings Coöperatief U.A. here.

P/E: 31.89 Forward P/E: 21.01 Industry P/E: N/A
P/S: 2.36 Price/Book: N/A EV/EBITDA: 19.28
Market Cap: $4.30B Avg. Daily Volume: 727,735 52 Week Range: $24.11 – $31.02

2. Natus Medical Inc. (BABY): $39.29

President and CEO James B. Hawkins acquired 10,000 shares of this newborn care and neurology healthcare products company, paying $38.48 per share for a total amount of $384,840. Mr. Hawkins increased his stake by 2.22% to 459,725 shares with this purchase.

This is an interesting company that is growing both its top line and bottom line, posting free cash flow that is often higher than reported earnings and has managed to maintain a strong balance sheet with no net debt. While valuation at 17 times EBITDA is too rich for my liking, it is inline with some of the larger medical devices companies. Operating margins of 14.48% are lower than I would have expected and lower than larger medical devices companies.

I have added the company to my watch list in case a better entry point at a more attractive valuation presents itself in the future.

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

P/E: 33.87 Forward P/E: 22.45 Industry P/E: 33.99
P/S: 3.35 Price/Book: 3.2 EV/EBITDA: 16.98
Market Cap: $1.28B Avg. Daily Volume: 305,339 52 Week Range: $29.54 – $51.05

3. Central Securities Corp. (CET): $21.24

Director Leo Price Blackford acquired 7,500 shares of this asset management company, paying $21.49 per share for a total amount of $161,175. Mr. Blackford increased his stake by 68.24% to 18,490 shares with this purchase.

You can view the list of recent insider transactions for Central Securities Corp. here.

P/E: 35.88 Forward P/E: N/A Industry P/E: N/A
P/S: 56.36 Price/Book: 0.86 EV/EBITDA: 119.32
Market Cap: $522.41M Avg. Daily Volume: 26,931 52 Week Range: $16.32 – $21.96

4. Opko Health, Inc. (OPK): $10.59

CEO & Chairman Phillip Frost M.D. acquired 14,400 shares of this devices and drug development company, paying $10.94 per share for a total amount of $157,542. These shares were purchased indirectly by Frost Gamma Investments Trust.

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

P/E: 44.31 Forward P/E: 353 Industry P/E: 24.86
P/S: 5.47 Price/Book: 2.88 EV/EBITDA: 56.22
Market Cap: $5.90B Avg. Daily Volume: 3,005,010 52 Week Range: $7.12 – $11.85

5. Lands’ End, Inc. (LE): $14.5

Shares of this apparel retailer were acquired by 2 insiders:

  • Director Robert Galvin acquired 5,500 shares, paying $14.97 per share for a total amount of $82,348.  2,000 of these shares were purchased indirectly by SEP and 3,500 of these shares were purchased indirectly through IRA.
  • Director Jignesh Patel acquired 2,500 shares, paying $15.15 per share for a total amount of $37,875. Mr. Patel increased his stake by 33.33% to 10,000 shares with this purchase.

You can view the list of recent insider transactions for Lands’ End, Inc. here.

P/E: N/A Forward P/E: 19.86 Industry P/E: 40
P/S: 0.35 Price/Book: 1.26 EV/EBITDA: 8.97
Market Cap: $464.43M Avg. Daily Volume: 177,870 52 Week Range: $14.03 – $28.08

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $128.27

Shares of Facebook were sold by 4 insiders:

  • COB and CEO Mark Zuckerberg sold 735,977 shares for $129.08, generating $94.99 million from the sale.  These shares were sold indirectly by the Chan Zuckerberg Foundation.
  • Director Jan Koum sold 566,668 shares for $128.36, generating $72.74 million from the sale. These shares were sold indirectly through a trust.
  • Chief Product Officer Christopher K. Cox sold 15,600 shares for $127.18, generating $1.98 million from the sale.
  • VP and General Counsel Colin Stretch sold 750 shares for $127.63, generating $95,722 from the sale.

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

P/E: 61.31 Forward P/E: 25.3 Industry P/E: 26.94
P/S: 16.6 Price/Book: 7.28 EV/EBITDA: 31.16
Market Cap: $368.35B Avg. Daily Volume: 18,941,600 52 Week Range: $89.37 – $131.98

2. Copart, Inc. (CPRT): $53.56

Shares of this online auctions and vehicle remarketing services provider were sold by 5 insiders:

  • President Vincent W. Mitz sold 200,000 shares for $53.27, generating $10.65 million from the sale.  61,125 of these shares were sold indirectly through a trust.
  • Chief Executive Officer Jayson A. Adair sold 200,000 shares for $53.61, generating $10.72 million from the sale.
  • Executive Vice President William E. Franklin sold 100,000 shares for $52.95, generating $5.29 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Matt Blunt sold 65,000 shares for $53.53, generating $3.48 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • SVP, Chief Operating Officer Sean Eldridge sold 22,485 shares for $53.61, generating $1.21 million from the sale. 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 Copart, Inc. here.

P/E: 24.24 Forward P/E: 20.14 Industry P/E: 13.05
P/S: 4.58 Price/Book: 7.5 EV/EBITDA: 13.93
Market Cap: $5.86B Avg. Daily Volume: 567,972 52 Week Range: $32.26 – $54.85

3. American Financial Group Inc. (AFG): $75

Shares of this insurance company were sold by 2 insiders:

  • Co-CEO & Co-President Carl H. Lindner II sold 100,000 shares for $75.14, generating $7.51 million from the sale.  These shares were sold indirectly through a trust.
  • Director Terry S. Jacobs sold 400 shares for $75.57, generating $30,229 from the sale.

You can view the list of recent insider transactions for American Financial Group Inc. here.

P/E: 19.17 Forward P/E: 12.71 Industry P/E: 13.82
P/S: 1.04 Price/Book: 1.29 EV/EBITDA: 8.43
Market Cap: $6.52B Avg. Daily Volume: 226,331 52 Week Range: $64.87 – $76.03

4. National Fuel Gas Company (NFG): $54.07

Director Philip C. Ackerman sold 133,767 shares of this diversified energy company for $55.23, generating $7.39 million from the sale.

You can view the list of recent insider transactions for National Fuel Gas Company here.

P/E: N/A Forward P/E: 17.9 Industry P/E: 14.73
P/S: 3.18 Price/Book: 3.04 EV/EBITDA: 8.51
Market Cap: $4.60B Avg. Daily Volume: 334,058 52 Week Range: $37.03 – $59.62

5. ePlus inc. (PLUS): $94.41

Executive Chairman Phillip G. Norton sold 51,832 shares of this IT products and services provider for $90.43, generating $4.69 million from the sale.  These shares were sold indirectly by J.A.P. Investment Group, L.P.

You can view the list of recent insider transactions for ePlus inc. here.

P/E: 14.8 Forward P/E: 13.19 Industry P/E: 37.04
P/S: 0.53 Price/Book: 2.13 EV/EBITDA: 8.53
Market Cap: $670.31M Avg. Daily Volume: 72,314 52 Week Range: $61.78 – $109.33

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

Disclaimer: I do not hold any positions in any of the stocks mentioned in this article. 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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