Insider Weekends – Alexander Otto Adds to his DDR Stake

Welcome to edition 407 of Insider Weekends. Insider buying increased last week with insiders purchasing $75.12 million of stock compared to $55.14 million in the week prior. Selling more than doubled with insiders selling $1.18 billion of stock last week compared to $493.99 million 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 15.66. In other words, insiders sold almost 16 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 8.96.

Insider Sell Buy Ratio April 6, 2018

Insider Sell Buy Ratio April 6, 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. DDR Corp. (DDR): $7.48

Director Alexander Otto acquired 1,105,184 shares of this shopping center REIT, paying $7.32 per share for a total amount of $8.09 million. Mr. Otto increased his stake by 2.14% to 52,860,079 shares with this purchase.

Alexander Otto is the CEO of closely-held real estate management company ECE Projektmanagement. The company is based in Hamburg, Germany and manages about 200 shopping centers. He has been buying DDR stock actively since late February and following his latest purchases, owns about 14.4% of the company. To say retail REITs have had a difficult couple of  years would be an understatement as you can see from the following chart comparing DDR to the S&P 500 over the last two years.

DDR vs S&P 500

DDR vs S&P 500 (click to enlarge)

Yields on some of these retail REITs have reached double digits reflecting the turmoil in this sector and potentially providing some attractive opportunities. I feel that it is going to take a long time for this sector to stabilize as finding new tenants or repurposing space with a focus on entertainment/events can take years based on what I am seeing in two local malls. One of them is repurposing a Sears store and an old food court into a new space that includes movie theaters, a bowling alley and a new dining area. This project has been going on for at least a couple of years. Another shopping center was able to find a new tenant for a Sports Authority that closed after declaring bankruptcy but now three other shops including Toys R Us are closing down in the same shopping center.

The question is whether we are in the middle of this downturn or close to the end. I feel that we are still in the middle and any recovery is going to be a U shaped recovery instead of a V shaped rally from the lows. Mr. Otto appears to feel otherwise and is putting his money where his conviction lies. Given his considerable net worth and experience, it is probably worth exploring why he has been consistently purchasing DDR.

The company is spinning off a portfolio of 50 properties including its full exposure to Puerto Rico in Q3 2018 and the “new” DDR could be better positioned to weather this retail storm. This is one of those rare cases where the parent of the spinoff may prove to be a better opportunity than the spinoff.

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

P/E: N/A Forward P/E: 41.56 Industry P/E: 32.19
P/S: 3.00 Price/Book: 1.16 EV/EBITDA: 10.55
Market Cap: $2.75B Avg. Daily Volume: 4,852,745 52 Week Range: $6.76 – $13

2. Tiffany & Co. (TIF): $95.58

Director Francesco Trapani acquired 35,000 shares of this luxury jewelry retailer, paying $94.66 per share for a total amount of $3.31 million. These shares were purchased indirectly by Argenta Holdings Sarl, which is 100% owned by Mr. Trapani.

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

P/E: 32.29 Forward P/E: 19.31 Industry P/E: 39.4
P/S: 2.85 Price/Book: 3.68 EV/EBITDA: 11.53
Market Cap: $11.89B Avg. Daily Volume: 1,695,350 52 Week Range: $84.15 – $111.44

3. Tellurian Inc. (TELL): $7.87

President and CEO Meg Gentle acquired 100,000 shares of this natural gas company, paying $6.96 per share for a total amount of $695,710. Ms. Gentle increased her stake by 0.86% to 11,792,263 shares with this purchase.

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

P/E: N/A Forward P/E: -16.39 Industry P/E: 8.06
P/S: 330.35 Price/Book: 7.83 EV/EBITDA: -9.34
Market Cap: $1.8B Avg. Daily Volume: 1,266,488 52 Week Range: $6.45 – $13.74

4. Churchill Downs Incorporated (CHDN): $238.8

Director Richard L. Duchossois acquired 2,080 shares of this horse racing and casino gaming company, paying $240.65 per share for a total amount of $500,542. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for Churchill Downs Incorporated here.

P/E: 27.19 Forward P/E: 18.26 Industry P/E: 35.05
P/S: 3.58 Price/Book: 5.69 EV/EBITDA: 18.36
Market Cap: $3.16B Avg. Daily Volume: 143,365 52 Week Range: $154.65 – $279.45

5. Citius Pharmaceuticals, Inc. (CTXR): $2.99

Executive Chairman Leonard L. Mazur acquired 167,504 shares of this pharmaceutical company, paying $2.98 per share for a total amount of $499,999. Mr. Mazur increased his stake by 4.72% to 3,718,340 shares with this purchase.

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

P/E: N/A Forward P/E: N/A Industry P/E: 30.54
P/S: N/A Price/Book: 1.15 EV/EBITDA: -2.19
Market Cap: $31.89M Avg. Daily Volume: 45,740 52 Week Range: $2.5 – $7.95

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $157.2

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 580,000 shares for $155.67, generating $90.29 million from the sale. These shares were sold indirectly by various entities.
  • Chief Operating Officer Sheryl Sandberg sold 55,000 shares for $155.88, generating $8.57 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 29.17 Forward P/E: 17.90 Industry P/E: 41.69
P/S: 11.23 Price/Book: 6.14 EV/EBITDA: 18.83
Market Cap: $456.67B Avg. Daily Volume: 34,682,247 52 Week Range: $138.81 – $195.32

2. The Howard Hughes Corporation (HHC): $136.6

Shares of this real estate investment and development company were sold by 2 insiders:

  • Chief Executive Officer David Weinreb sold 400,000 shares for $138.46, generating $55.38 million from the sale.
  • Chief Administrative Officer Reuben Seth Davidsohn sold 9,445 shares for $137.10, generating $1.29 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 The Howard Hughes Corporation here.

P/E: 34.94 Forward P/E: 18.66 Industry P/E: 15.62
P/S: 5.35 Price/Book: 1.84 EV/EBITDA: 26.43
Market Cap: $5.89B Avg. Daily Volume: 314,914 52 Week Range: $114.28 – $139.75

3. Take-Two Interactive Software, Inc. (TTWO): $94.63

Chairman, CEO Strauss Zelnick sold 252,197 shares of this videogame company for $95.63, generating $24.12 million from the sale. These shares were sold indirectly by various entities.

You can view the list of recent insider transactions for Take-Two Interactive Software, Inc. here.

P/E: 58.06 Forward P/E: 19.04 Industry P/E: 39.02
P/S: 5.65 Price/Book: 7.68 EV/EBITDA: 43.06
Market Cap: $10.82B Avg. Daily Volume: 2,941,909 52 Week Range: $57.36 – $129.25

4. The Gap, Inc. (GPS): $30.84

Shares of this apparel chain were sold by 2 insiders:

  • Director Robert J. Fisher sold 500,000 shares for $31.28, generating $15.64 million from the sale.
  • VP & Chief Accounting Officer Dara Bazzano sold 508 shares for $31.02, generating $15,760 from the sale.

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

P/E: 14.41 Forward P/E: 11.13 Industry P/E: 39.4
P/S: 0.76 Price/Book: 3.82 EV/EBITDA: 5.80
Market Cap: $12.01B Avg. Daily Volume: 5,034,411 52 Week Range: $21.02 – $35.68

5. Apple Inc. (AAPL): $168.38

Shares of Apple were sold by 2 insiders:

  • Senior Vice President Philip W. Schiller sold 69,491 shares for $166.42, generating $11,564,679 from the sale. These shares were sold indirectly by a trust.
  • Senior Vice President Daniel J. Riccio sold 17,375 shares for $169.12, generating $2,938,512 from the sale.

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

P/E: 17.3588 Forward P/E: 12.8436 Industry P/E: 8.09
P/S: 3.57211 Price/Book: 6.10316 EV/EBITDA: 12.128
Market Cap: $854.36B Avg. Daily Volume: 38,183,927 52 Week Range: $140.06 – $183.5

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 members.

Disclaimer: I hold a long position in GAP (GPS) and a short position in Facebook (FB). 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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