Insider Weekends – Starboard Value adds to its Advance Auto Parts Stake

Welcome to edition 363 of Insider Weekends. Insider buying decreased with insiders buying $158.99 million of stock compared to $196.28 million in the week prior. Selling also declined with insiders selling $1.73 billion of stock last week compared to $1.84 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 went up to 10.88. In other words, insiders sold almost 11 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 9.36.

Insider Sell Buy Ratio June 2, 2017

Insider Sell Buy Ratio June 2, 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. Advance Auto Parts Inc. (AAP): $137.8

Shares of this auto parts retailer were acquired by 5 insiders:

  • Director Jeffrey C. Smith acquired 350,000 shares, paying $134.29 per share for a total amount of $47 million. These shares were purchased indirectly through various Starboard Value funds.
  • President and CEO Thomas Greco acquired 16,000 shares, paying $134.63 per share for a total amount of $2.15 million. Mr. Greco increased his stake by 16.22% to 114,630 shares with this purchase.
  • Director Eugene I. Lee acquired 1,895 shares, paying $132.18 per share for a total amount of $250,481. Mr. Lee increased his stake by 75.71% to 4,398 shares with this purchase.
  • Director Brad W. Buss acquired 1,200 shares, paying $134.47 per share for a total amount of $161,364. Mr. Buss increased his stake by 62.24% to 3,128 shares with this purchase.
  • Director Reuben E. Slone acquired 500 shares, paying $134.87 per share for a total amount of $67,435. Mr. Slone increased his stake by 19.53% to 3,060 shares with this purchase.

We don’t often come across insider purchases where a well know activist investor like Starboard Value and the CEO purchase shares at the same time. Fortune magazine once called Starboard Value’s Jeff Smith “the most feared man in corporate america”. Starboard Value has been involved with Advance Auto Parts since late 2015 and Mr. Greco has been the CEO of the company since last April but it looks like neither of them have been able to effect positive change at the company.

Valuation metrics don’t paint the picture of an undervalued company and revenue has declined in five of the last six quarters. Earnings have been equally lackluster with the last four quarters seeing earnings decline year-over-year and missing analyst estimates in three of those four quarters. It will be interesting to see if Starboard continues to average down and if future results from the company reflect the confidence Starboard has in it.

You can view the list of recent insider transactions for Advance Auto Parts Inc. here.

P/E: 24.96 Forward P/E: 17.08 Industry P/E: 30.51
P/S: 1.07 Price/Book: 3.36 EV/EBITDA: N/A
Market Cap: $10.17B Avg. Daily Volume: 1,209,178 52 Week Range: $129.40 – $177.83

2. Avnet, Inc. (AVT): $37

Director James A. Lawrence acquired 408,451 shares of this electronic components and technology company, paying $36.99 per share for a total amount of $15.11 million. Mr. Lawrence increased his stake by 140.10% to 700,000 shares with this purchase.

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

P/E: 8.89 Forward P/E: 11.49 Industry P/E: 17.92
P/S: 0.18 Price/Book: 0.92 EV/EBITDA: N/A
Market Cap: $4.62 Avg. Daily Volume: 1,448,683 52 Week Range: $35.96 – $51.50

3. Kinder Morgan, Inc. (KMI): $18.95

Shares of this oil & gas pipelines company were acquired by 2 insiders:

  • Executive Chairman Richard D. Kinder acquired 500,000 shares, paying $18.58 per share for a total amount of $9.29 million. Mr. Kinder increased his stake by 0.21% to 234,712,353 shares with this purchase.
  • VP, Corporate Development Dax Sanders acquired 2,600 shares, paying $18.60 per share for a total amount of $48,371. Mr. Sanders increased his stake by 0.96% to 273,927 shares with this purchase. 500 of these shares were purchased indirectly by Mr. Sanders’ spouse, 800 by his mother’s IRA and 800 by a joint tenant.

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

P/E: 62.75 Forward P/E: 24.93 Industry P/E: 34.57
P/S: 3.18 Price/Book: 1.22 EV/EBITDA: N/A
Market Cap: $42.3B Avg. Daily Volume: 15,632,501 52 Week Range: $17.07 – $23.36

4. Revlon, Inc. (REV): $18.95

Director Ronald O. Perelman acquired 120,000 shares of this beauty care products company, paying $18.66 per share for a total amount of $2.24 million. These shares were purchased indirectly through MacAndrews & Forbes Incorporated and related entities.

This is the third time in the last four weeks that we have featured purchases of Revlon by Mr. Perelman.

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

P/E: -14.08 Forward P/E: N/A Industry P/E: 78.29
P/S: 0.40 Price/Book: N/A EV/EBITDA: N/A
Market Cap: $989.27M Avg. Daily Volume: 260,521 52 Week Range: $18.15 – $37.96

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

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

  • CEO & Chairman Phillip Frost M.D. acquired 290,900 shares, paying $6.17 per share for a total amount of $1.79 million. These shares were purchased indirectly by Frost Gamma Investments Trust.
  • Director John A. Paganelli acquired 5,000 shares, paying $6.17 per share for a total amount of $30,840. These shares were purchased indirectly by Mr. Paganelli’s spouse.
  • Executive VP-Administration Steven D. Rubin acquired 2,000 shares, paying $6.10 per share for a total amount of $12,200. Mr. Rubin increased his stake by 0.04% to 5,685,915 shares with this purchase.

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

P/E: -83.88 Forward P/E: -223.67 Industry P/E: 14.29
P/S: 3.06 Price/Book: 1.78 EV/EBITDA: N/A
Market Cap: $3.75B Avg. Daily Volume: 5,809,362 52 Week Range: $5.99 – $12.15

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

Notable Insider Sales:

1. Wal-Mart Stores, Inc. (WMT): $79.62

Director Robson S. Walton sold 2,613,136 shares of Wal-Mart for $78.22, generating $204.39 million from the sale.

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

P/E: 18.08 Forward P/E: 17.31 Industry P/E: 43.02
P/S: 0.50 Price/Book: 3.28 EV/EBITDA: N/A
Market Cap: $241.37B Avg. Daily Volume: 7,996,466 52 Week Range: $65.28 – $79.93

2. Facebook, Inc. (FB): $153.61

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 279,533 shares for $152.04, generating $42.49 million from the sale. These shares were sold indirectly through various entities.
  • VP and General Counsel Colin Stretch sold 750 shares for $151.80, generating $113,850 from the sale.

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

P/E: 39.06 Forward P/E: 25.64 Industry P/E: 37.1
P/S: 14.70 Price/Book: 7.15 EV/EBITDA: N/A
Market Cap: $445.19 Avg. Daily Volume: 16,854,365 52 Week Range: $108.23 – $153.63

3. Arista Networks, Inc. (ANET): $152.26

Shares of this networking solutions provider were sold by 3 insiders:

  • President and CEO Jayshree Ullal sold 93,343 shares for $147.56, generating $13.77 million from the sale. These shares were sold indirectly through various trusts.
  • SVP and General Counsel Marc Taxay sold 2,000 shares for $147.51, generating $295,020 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Daniel Scheinman sold 833 shares for $151.68, generating $126,353 from the sale.

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

P/E: 49.18 Forward P/E: 32.53 Industry P/E: 10.49
P/S: 8.97 Price/Book: 8.91 EV/EBITDA: N/A
Market Cap: $10.96B Avg. Daily Volume: 1,281,191 52 Week Range: $60.51 – $152.54

4. Fossil Group, Inc. (FOSL): $10.72

Chairman of the Board & CEO Kosta N. Kartsotis sold 1,075,000 shares of this apparel footwear & accessories company for $11.29, generating $12.14 million from the sale.

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

P/E: 21.02 Forward P/E: 10.41 Industry P/E: 26.3
P/S: 0.18 Price/Book: 0.53 EV/EBITDA: N/A
Market Cap: $519.54M Avg. Daily Volume: 2,360,215 52 Week Range: $10.41 – $36.87

5. Best Buy Co., Inc. (BBY): $59.67

Shares of Best Buy were sold by 5 insiders:

  • Chief Merchandizing & Marketing Officer Rajendra M. Mohan sold 63,631 shares for $60.02, generating $3.82 million from the sale.
  • General Counsel & Secretary Keith J. Nelsen sold 55,153 shares for $59.01, generating $3.25 million from the sale.
  • Pres, Multi-Channel, Retail Shari L. Ballard sold 15,000 shares for $59.48, generating $892,262 from the sale.
  • VP, Finance – Contr. & CAO Mathew Watson sold 14,568 shares for $60.43, generating $880,344 from the sale.
  • President, Services Patricia H. Walker sold 9,974 shares for $59.86, generating $597,091 from the sale.

You can view the list of recent insider transactions for Best Buy Co., Inc. here.

P/E: 16.05 Forward P/E: 14.52 Industry P/E: 18.79
P/S: 0.46 Price/Book: 4.1 EV/EBITDA: N/A
Market Cap: $18.34B Avg. Daily Volume: 4,695,684 52 Week Range: $28.76 – $61.95

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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