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Insider Weekends – CEO of Walgreens Acquires 2 Million Shares from KKR

  • November 6, 2016

Welcome to edition 333 of Insider Weekends. Insider buying increased significantly last week with insiders buying $393.57 million of stock compared to $30.51 million in the week prior. Selling also increased with insiders selling $1.23 billion of stock last week compared to $965.22 million in the week prior.

Insider enthusiasm increased last week even as the S&P 500 lost ground for nine continuous sessions, the longest losing streak in over 35 years. The losses were small and amounted to a total loss of 2% for the week. One of the reasons for the thirteen fold increase in insider buying was the post-earnings bump in insider buying we usually see each quarter. The majority of the insider buying was however driven by a large purchase of $162.82 million by the CEO of Walgreens (WBA) and by Carl Icahn adding to his position in Herbalife (HLF) to the tune of $100 million as discussed below. Beyond these large purchase, other interesting purchases that did not make the top 5 list this week include purchases by the CEO and by the President of Newell Brands (NWL) and a $717,000 purchase by the CEO of New Media Investment Group (NEWM).

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 3.13. In other words, insiders sold more than 3 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 31.64. 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 November 4, 2016
Insider Sell Buy Ratio November 4, 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. Walgreens Boots Alliance, Inc. (WBA): $80.35

Executive Vice Chairman, CEO Stefano Pessina acquired 2,000,000 shares of this pharmacy-led health and wellbeing company, paying $81.41 per share for a total amount of $162.82 million. These shares were purchased indirectly by Alliance Sante Participations S.A, which is 100% owned by another corporation, which in turn is controlled 100% by Mr. Pessina.

This was not an open market purchase, but the stake was acquired from Kohlberg Kravis Roberts & Co. L.P. (KKR). The affiliates of KKR are also selling 20.46 million shares in a secondary offering. Fortune magazine had a very interesting profile on Mr. Pessina titled The Billionaire Behind Walgreens’ Quest for Global Dominance that is well worth a read.

We normally do not feature purchases as a result of private transactions but decided to make an exception in this case.

You can view the list of recent insider transactions for Walgreens Boots Alliance, Inc. here.

P/E: 21.03Forward P/E: 14.5Industry P/E: N/A
P/S: 0.75Price/Book: 2.93EV/EBITDA: 12.17
Market Cap: $86.96BAvg. Daily Volume: 4,320,83052 Week Range: $71.5 – $87.05

2. Herbalife Ltd. (HLF): $54.96

10% Owner Carl C. Icahn acquired 1,832,402 shares of this nutrition company, paying $54.70 per share for a total amount of $100.23 million. These shares were purchased indirectly through a fund.

We wrote the following about another large $136.69 million purchase of Herbalife by Mr. Icahn in August,

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.

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

P/E: 19.29Forward P/E: 11.1Industry P/E: 21.47
P/S: 1.15Price/Book: 42.2EV/EBITDA: 10.87
Market Cap: $5.11BAvg. Daily Volume: 1,483,70052 Week Range: $42.26 – $72.22

3. Seattle Genetics, Inc. (SGEN): $56.24

Director Felix Baker acquired 1,229,062 sharesof this biotech company, paying $56.17 per share for a total amount of $69.04 million. These shares were purchased indirectly by Baker Bros. Advisors LP.

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

P/E: N/AForward P/E: N/AIndustry P/E: 22
P/S: 19.86Price/Book: 12.18EV/EBITDA: -78.7
Market Cap: $7.96BAvg. Daily Volume: 872,23652 Week Range: $26.02 – $58.91

4. Vornado Realty Trust (VNO): $88.22

Director Daniel R. Tisch acquired 50,000 shares of this commercial REIT, paying $88.53 per share for a total amount of $4.43 million.  These shares were purchased indirectly by The Damial Foundation.

You can view the list of recent insider transactions for Vornado Realty Trust here.

P/E: 41.59Forward P/E: 16.28Industry P/E: 8.33
P/S: 6.62Price/Book: 3.11EV/EBITDA: 22.44
Market Cap: $17.75BAvg. Daily Volume: 747,74552 Week Range: $78.91 – $108.69

5. New Mountain Finance Corporation (NMFC): $13.2

Shares of this business development company were acquired by 5 insiders:

  • Director Steven B. Klinsky acquired 214,276 shares, paying $13.28 per share for a total amount of $2.85 million. Mr. Klinsky increased his stake by 4.50% to 4,979,742 shares with this purchase.
  • CEO and Director Robert Hamwee acquired 25,000 shares, paying $13.33 per share for a total amount of $333,311. Mr. Hamwee increased his stake by 11.11% to 250,100 shares with this purchase.
  • President and COO John Kline acquired 9,640 shares, paying $13.22 per share for a total amount of $127,435. Mr. Kline increased his stake by 43.00% to 32,057 shares with this purchase.
  • EVP, CAO and Director Adam Weinstein acquired 3,750 shares, paying $13.23 per share for a total amount of $49,630. Mr. Weinstein increased his stake by 5.90% to 67,278 shares with this purchase.
  • Director David Ogens acquired 1,600 shares, paying $13.40 per share for a total amount of $21,440. Mr. Ogens increased his stake by 3.78% to 43,963 shares with this purchase.

You can view the list of recent insider transactions for New Mountain Finance Corporation here.

P/E: N/AForward P/E: N/AIndustry P/E: 21.44
P/S: N/APrice/Book: N/AEV/EBITDA: N/A
Market Cap: $N/AAvg. Daily Volume: N/A52 Week Range: $10.87 – $14.3

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $58.71

Shares of Microsoft were sold by 2 insiders:

  • Founder Bill Gates sold 3,300,000 shares for $60.30, generating $198.99 million from the sale.
  • EVP, Chief Marketing Officer Christopher C. Capossela sold 12,000 shares for $59.57, generating $714,841 from the sale.

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

P/E: 28.12Forward P/E: 18.12Industry P/E: 155
P/S: 5.39Price/Book: 6.55EV/EBITDA: 14.82
Market Cap: $457.00BAvg. Daily Volume: 24,475,70052 Week Range: $48.04 – $61.37

2. Apple Inc. (AAPL): $108.84

Shares of Apple were sold by 3 insiders:

  • Senior Vice President Eduardo H. Cue sold 335,000 shares for $111.86, generating $37.47 million from the sale.  These shares were sold indirectly through a trust.
  • Senior Vice President Daniel J. Riccio sold 66,647 shares for $112.65, generating $7.51 million from the sale.
  • Senior Vice President Philip W. Schiller sold 43,769 shares for $115.07, generating $5.04 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 13.1Forward P/E: 10.81Industry P/E: 22.69
P/S: 2.72Price/Book: 4.57EV/EBITDA: 8.58
Market Cap: $586.48BAvg. Daily Volume: 35,214,60052 Week Range: $89.47 – $121.81

3. Juniper Networks, Inc. (JNPR): $24.9

Director Scott Kriens sold 1,250,000 shares of this network infrastructure company for $26.33, generating $32.92 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 16.13Forward P/E: 11.22Industry P/E: N/A
P/S: 1.93Price/Book: 1.99EV/EBITDA: 8.68
Market Cap: $9.54BAvg. Daily Volume: 4,227,88052 Week Range: $21.18 – $31.45

4. Franklin Resources, Inc. (BEN): $33.8

Vice Chairman Rupert H. Johnson Jr. sold 300,000 shares of this asset management company for $33.65, generating $10.09 million from the sale. These shares were sold indirectly through IRA.

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

P/E: 11.5Forward P/E: 12.25Industry P/E: 21.44
P/S: 2.88Price/Book: 1.64EV/EBITDA: 4.78
Market Cap: $19.47BAvg. Daily Volume: 2,679,37052 Week Range: $30.56 – $42.23

5. Northrop Grumman Corporation (NOC): $225.23

Shares of this aerospace/defense company were sold by 4 insiders:

  • Chairman, CEO and President Wesley G. Bush sold 35,000 shares for $228.37, generating $7.99 million from the sale.
  • Corp VP & Chief HR Officer Denise M. Peppard sold 2,015 shares for $229.50, generating $462,443 from the sale.
  • Corp VP & Pres Tech Services Christopher T. Jones sold 240 shares for $229.50, generating $55,080 from the sale.
  • Corp VP, CFO Kenneth L. Bedingfield sold 125 shares for $229.50, generating $28,688 from the sale.

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

P/E: 19.22Forward P/E: 18.78Industry P/E: 27.6
P/S: 1.67Price/Book: 6.91EV/EBITDA: 12.83
Market Cap: $40.22BAvg. Daily Volume: 839,84552 Week Range: $175 – $230.7

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

Disclaimer: I hold a long position in Walgreens Boots Alliance, Inc. (WBA). 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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