Insider Weekends – Mark Zuckerberg Continues Selling Facebook Stock As Crisis Unfolds

Welcome to edition 405 of Insider Weekends. Insider buying declined significantly last week with insiders purchasing $75.46 million of stock compared to $203.25 million in the week prior. In a week that saw the S&P 500 decline almost 6%, insiders stepped up their selling with $3.24 billion of stock sold compared to $2.65 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 went up to 42.98. In other words, insiders sold almost 43 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 13.02.

Insider Sell Buy Ratio March 23, 2018

Insider Sell Buy Ratio March 23, 2018

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. La Jolla Pharmaceutical Company (LJPC): $28.45

Director Kevin C. Tang acquired 508,474 shares of this biopharmaceutical company, paying $29.50 per share for a total amount of $14.99 million. These shares were purchased indirectly by Tang Capital Partners, LP.

You can view the list of recent insider transactions for La Jolla Pharmaceutical Company here.

P/E: N/A Forward P/E: -10.86 Industry P/E: 223.28
P/S: N/A Price/Book: 7.73 EV/EBITDA: -4.71
Market Cap: $741.92M Avg. Daily Volume: 552,493 52 Week Range: $22.68 – $41.36

2. B. Riley Financial, Inc. (RILY): $19.5

Chairman and CEO Bryant R. Riley acquired 221,181 shares of this asset management company, paying $18.25 per share for a total amount of $4.04 million. Mr. Riley increased his stake by 5.44% to 4,287,439 shares with this purchase.

It was interesting to see this purchase the week before magicJack VocalTec (CALL) shareholders voted to approve B. Riley’s acquisition of the company. B. Riley also acquired FBR & Co. in a deal valued $160 million last year.

7,200 of these shares appear to be have been acquired on the open market and the rest were acquired from an unaffiliated stockholder in a negotiated, private purchase transaction. Considering the size of B. Riley, this is a significant purchase.

You can view the list of recent insider transactions for B. Riley Financial, Inc. here.

P/E: 40.63 Forward P/E: N/A Industry P/E: 29.29
P/S: 1.72 Price/Book: 1.92 EV/EBITDA: N/A
Market Cap: $519.37M Avg. Daily Volume: 56,931 52 Week Range: $13.55 – $20.35

3. The Home Depot, Inc. (HD): $171.8

Director Gregory D. Brenneman acquired 16,827 shares of this home improvement retailer, paying $178.29 per share for a total amount of $3 million. These shares were purchased indirectly through a trust.

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

P/E: 23.57 Forward P/E: 16.86 Industry P/E: 22.65
P/S: 1.99 Price/Book: 137.11 EV/EBITDA: 13.54
Market Cap: $200.62B Avg. Daily Volume: 5,314,026 52 Week Range: $144.25 – $207.61

4. Tiffany & Co. (TIF): $95.94

Shares of this luxury jewelry retailer were acquired by 2 insiders:

  • Director Francesco Trapani acquired 25,000 shares, paying $97.31 per share for a total amount of $2.43 million. These shares were purchased indirectly by Argenta Holdings Sarl, which is 100% owned by Mr. Trapani.
  • Director James E. Lillie acquired 5,000 shares, paying $97.81 per share for a total amount of $489,049. Mr. Lillie increased his stake by 41.13% to 17,156 shares with this purchase.

You can view the list of recent insider transactions for Tiffany & Co. here.

P/E: 32.41 Forward P/E: 19.38 Industry P/E: 36.74
P/S: 2.86 Price/Book: 3.69 EV/EBITDA: 11.53
Market Cap: $11.93B Avg. Daily Volume: 1,516,221 52 Week Range: $84.15 – $111.44

5. Entercom Communications Corp. (ETM): $9.25

Chairman Emeritus Joseph M. Field acquired 200,000 shares of this radio broadcasting company, paying $9.92 per share for a total amount of $1.98 million. Mr. Field increased his stake by 4.28% to 4,871,897 shares with this purchase.

Mr. Field also acquired $7.98 million worth of stock in the week prior.

You can view the list of recent insider transactions for Entercom Communications Corp. here.

P/E: 2.11 Forward P/E: 6.51 Industry P/E: 25.73
P/S: 2.16 Price/Book: 0.75 EV/EBITDA: 31.36
Market Cap: $1.28B Avg. Daily Volume: 2,430,398 52 Week Range: $9.25 – $14.53

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $159.39

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 1,236,746 shares for $173.94, generating $215.12 million from the sale. These shares were sold indirectly through various entities.
  • Chief Operating Officer Sheryl Sandberg sold 55,000 shares for $183.13, generating $10.07 million from the sale. These shares were sold indirectly through a trust.

There was an article in CNBC last week that discussed how Zuckerberg has sold more Facebook stock in the last 3 months than any insider at any other company. Insiders of companies that have seen significant stock price appreciation often sell for diversification, estate planning and other purposes. Considering the nearly half trillion dollars market cap of Facebook and how much its stock had appreciated before the recent decline, it was not surprising to me that Zuckerberg has been selling more than all insiders at all other companies.

Facebook has been topping our list of insider sales for several months now and so I checked our list of Facebook insider purchases to see if Zuckerberg’s sales of Facebook stock have been consistent or have increased in recent weeks. As mentioned in this tweet, his pace of selling had accelerated this year. What totally caught me by surprise was that he continued selling last week even as the Cambridge Analytica scandal unfolded. The only thing that can be said in his defense is that some of these sales were done indirectly by the Chan Zuckerberg foundation and that all of them were done under an established trading plan called the Rule 10b5-1 trading plan.

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

P/E: 29.57 Forward P/E: 17.91 Industry P/E: 42.23
P/S: 11.39 Price/Book: 6.23 EV/EBITDA: 18.83
Market Cap: $463.03B Avg. Daily Volume: 28,259,277 52 Week Range: $138.77 – $195.32

2. Garmin Ltd. (GRMN): $57.68

Shares of this GPS manufacturer were sold by 2 insiders:

  • Executive Chairman Min H. Kao sold 345,164 shares for $60.04, generating $20.72 million from the sale.
  • General Manager – Garmin Corp. Pao-Chang Huang sold 4,800 shares for $60.37, generating $289,776 from the sale.

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

P/E: 15.67 Forward P/E: 17.97 Industry P/E: 37.87
P/S: 3.52 Price/Book: 2.85 EV/EBITDA: 13.15
Market Cap: $10.85B Avg. Daily Volume: 1,198,939 52 Week Range: $48.5 – $65.96

3. The Gap, Inc. (GPS): $31.04

Shares of this apparel chain were sold by 3 insiders:

  • Director William Sydney Fisher sold 500,000 shares for $32.10, generating $16.05 million from the sale.
  • EVP & CIO Paul Joseph Chapman sold 78,325 shares for $32.26, generating $2.53 million from the sale. 68,750 of these shares were sold as a result of exercising options immediately prior to the sale.
  • VP & Chief Accounting Officer Dara Bazzano sold 6,860 shares for $32.32, generating $221,701 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 The Gap, Inc. here.

P/E: 14.50 Forward P/E: 11.21 Industry P/E: 36.74
P/S: 0.76 Price/Book: 3.84 EV/EBITDA: 5.8
Market Cap: $12.08B Avg. Daily Volume: 4,947,929 52 Week Range: $21.02 – $35.68

4. Kohl’s Corporation (KSS): $61.98

Shares of this department stores chain were sold by 2 insiders:

  • Chairman, President, CEO Kevin Mansell sold 151,194 shares for $64.19, generating $9,7 million from the sale. These shares were sold indirectly through a trust.
  • Chief Administrative Officer Richard D. Schepp sold 20,480 shares for $65.00, generating $1.33 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 Kohl’s Corporation here.

P/E: 12.11 Forward P/E: 11.25 Industry P/E: 79.69
P/S: 0.55 Price/Book: 1.88 EV/EBITDA: 5.66
Market Cap: $10.41B Avg. Daily Volume: 4,137,918 52 Week Range: $35.16 – $69.48

5. UnitedHealth Group Incorporated (UNH): $212.55

Shares of this health insurance provider were sold by 3 insiders:

  • Vice Chairman, UHG and CEO, Optum Larry C. Renfro sold 22,184 shares for $228.94, generating $5.08 million from the sale.
  • EVP & CEO, UnitedHealthcare Steven H. Nelson sold 14,233 shares for $230.22, generating $3.28 million from the sale.
  • Director Richard T. Burke sold 10,000 shares for $224.36, generating $2.24 million from the sale.

You can view the list of recent insider transactions for UnitedHealth Group Incorporated here.

P/E: 19.83 Forward P/E: 15.07 Industry P/E: 21.78
P/S: 1.02 Price/Book: 4.31 EV/EBITDA: 13.28
Market Cap: $205.68B Avg. Daily Volume: 3,816,916 52 Week Range: $162.74 – $250.79

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: I hold long positions in Entercom Communications (ETM) and The Gap (GPS) and a short position in Facebook. 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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