Insider Weekends – Leon Cooperman’s Omega Capital Adds to Their Ocwen Financial Stake

Welcome to edition 399 of Insider Weekends. Insider buying declined a little last week with insiders purchasing $46.39 million of stock compared to $47.89 million in the week prior. Selling also declined with insiders selling $994.97 million of stock last week compared to $1.03 billion in the week prior.

While insider buying for the week in dollars was a little below the prior week, the number of insiders who purchased stock last week nearly doubled. As more companies release earnings, we are likely to see this pace of insider buying increase, especially if this market correction continues. We have had two weeks of declines of 3.85% and 5.16% in the S&P 500, which in my opinion has put most stocks at the levels we saw at the beginning of the year. If stocks did not appear very attractive at the start of this year on a valuation basis, then I don’t see how they would appear more attractive now, besides the fact that most investors are anchored to a higher price.

One thing for certain is that volatility has returned to this market and we may not see a complacent rise up like we saw all of last year and in the first four weeks of this year. The 1.49% rise in the S&P 500 on Friday was achieved after the index oscillated between gains and losses several times through the day. I wrote the following two weeks ago and still feel that the risk continues to remain on the downside.

The S&P 500 has gained 7.45% since the start of this year after gaining over 21% in 2017. According to Preston Pysh, “the S&P500 is priced at 3 Standard Deviations above the 200 DMA. Last time we saw that it was 24 March 2000.”. 

It feels like a large part of the global growth story and a lower corporate tax rate is already baked into the markets.  This does not mean a correction is imminent as this “melt up” phase of the market can continue for several months.

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 a sliver to 21.45. In other words, insiders sold more than 21 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 21.48.

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. Aon plc (AON): $137.91

Director Lester B. Knight acquired 60,000 shares of this insurance company, paying $138.42 per share for a total amount of $8.31 million. 50,000 of these shares were purchased indirectly by a trust and 10,000 of these shares were purchased indirectly by a Family Limited Partnership.

You can view the list of recent insider transactions for Aon plc here.

2. Ocwen Financial Corporation (OCN): $3.2

10% Owner Leon G. Cooperman acquired 1,524,913 shares of this mortgage servicing company, paying $3.18 per share for a total amount of $4.84 million. These shares were purchased indirectly by Omega Capital Partners.

We normally tend to exclude insider purchases by 10% owners and funds but decided to make an exception in this case. For a little background about Leon Cooperman check out the article Leon Cooperman on Life After an SEC Investigation from last year.

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

3. Biglari Holdings Inc. (BH): $403.13

Director Sardar Biglari, acquired 6,857 shares of this holding company, paying $397.23 per share for a total amount of $2.72 million. These shares were purchased indirectly by The Lion Fund.

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

4. Kite Realty Group Trust (KRG): $14.48

Shares of this retail REIT were acquired by 2 insiders:

• Director William E. Bindley acquired 100,000 shares, paying $15.06 per share for a total amount of $1.51 million. Mr. Bindley increased his stake by 156.41% to 163,934 shares with this purchase.
• Director Barton R. Peterson acquired 13,350 shares, paying $15.04 per share for a total amount of $200,784. Mr. Peterson increased his stake by 77.03% to 30,680 shares with this purchase.

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

5. Lakeland Financial Corporation (LKFN): $46.69

Director Scott M. Welch acquired 25,000 shares of this regional bank, paying $45.64 per share for a total amount of $1,140,968. Mr. Welch increased his stake by 24.32% to 127,798 shares with this purchase. 10,000 of these shares were purchased indirectly by different entities.

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

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

Notable Insider Sales:

1. Concho Resources Inc. (CXO): $138.98

Shares of this oil & gas exploration company were sold by 2 insiders:

• Exec VP & Chief Operating Officer Joseph E. Wright sold 83,759 shares for $148.27, generating $12.42 million from the sale.
• Chairman and CEO Timothy A. Leach sold 40,000 shares for $148.14, generating $5.93 million from the sale.

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

2. Adobe Systems Incorporated (ADBE): $187.99

Shares of this software company were sold by 2 insiders:

• EVP, CFO & Asst. Secretary Mark Garrett sold 54,488 shares for $187.38, generating $10.21 million from the sale.
• EVP, Gen. Counsel & Secretary Michael A. Dillon sold 18,079 shares for $194.26, generating $3.51 million from the sale.

You can view the list of recent insider transactions for Adobe Systems Incorporated here.

3. Commerce Bancshares, Inc. (CBSH): $56.89

Chairman of the Board, CEO David W. Kemper sold 78,359 shares of this regional bank for $57.45, generating $4.5 million from the sale. These shares were sold indirectly by Tower Properties Co.

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

4. Lincoln National Corporation (LNC): $75.38

Shares of this insurance company were sold by 4 insiders:

• President & CEO Dennis R. Glass sold 102,367 shares for $84.71, generating $8.67 million from the sale.
• EVP & CFO Randal J. Freitag sold 31,657 shares for $84.32, generating $2.67 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP & CHRO Lisa Buckingham sold 9,462 shares for $84.51, generating $799,671 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP & CIO Ellen Cooper sold 7,300 shares for $85.01, generating $620,568 from the sale. 1,300 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 Lincoln National Corporation here.

5. Align Technology, Inc. (ALGN): $229.37

VP, Operations Emory Wright sold 45,780 shares of this dental products company for $260.08, generating $11.91 million from the sale.

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

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

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium and Plus members.

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.

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