Insider Weekends: Father – Daughter Team at American Homes 4 Rent Acquire Shares

Welcome to edition 429 of Insider Weekends. Insider buying increased slightly last week with insiders purchasing $38.88 million of stock compared to $36.40 million in the week prior. Despite this small increase in insider buying, some of the purchases this week were very interesting. Selling on the other hand declined with insiders selling $1.11 billion of stock last week compared to $1.26 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 decreased to 28.6. In other words, insiders sold almost 29 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 34.49.

Insider Sector Heat Map September 7, 2018

Insider Sector Heat Map September 7, 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. American Homes 4 Rent (AMH): $22.87

Shares of this real estate investment trust were acquired by 2 insiders:

  • Director Wayne B. Hughes acquired 217,000 shares, paying $23.01 per share for a total amount of $4.99 million.
  • Director Tamara Hughes Gustavson acquired 217,000 shares, paying $22.93 per share for a total amount of $4.98 million. Ms. Gustavson increased her stake by 1.39% to 15,803,898 shares with this purchase.

We wrote the following after Director Wayne Hughes’ insider purchase in mid-2015 at much lower prices,

This is the third purchase (of) a million shares by Mr. Hughes we have reported on over the last six months. Following his purchase in December we mentioned,

“Mr. Hughes is the billionaire founder of Public Storage (PSA) and retired as the CEO of PSA in 2012. He founded the former manager of American Homes 4 Rent in 2011.”

For a REIT, the company has an unusually low yield of just 1.2%, when compared to the average yield of 3.27% of all residential equity REITs (PDF). The value most likely lies in the single family homes that company holds on its balance sheet as their timing in buying single family homes after the great recession was impeccable. The company trades at 1.05 times tangible book value.

With the price appreciating from the time we wrote this in mid-2015, the yield is even lower now at just 0.87% but shareholder equity has increased significantly in the ensuing years. The company is now profitable on a net income basis, but since this is a REIT, what is more interesting is the increase in free cash flow (or the AFFO that some REITs prefer to track). The icing on the cake is depreciated assets on the balance sheet that significantly exceed net debt. I plan on expanding on the opportunity for premium members in the next few days.

You can view the list of recent insider transactions for American Homes 4 Rent here.

P/E: N/A Forward P/E: 84.7 Industry P/E: 28.6
P/S: 7.94 Price/Book: 1.31 EV/EBITDA: 20.02
Market Cap: $8.04B Avg. Daily Volume: 2,133,541 52 Week Range: $18.39 – $23.34

2. Tiffany & Co. (TIF): $122.87

Director Francesco Trapani acquired 55,000 shares of this luxury jewelry retailer, paying $123.90 per share for a total amount of $6.81 million. These shares were purchased indirectly by Argenta Holdings Sarl, which is 100% owned by Mr. Trapani.

We wrote the following about Mr. Trapani after his $11.11 million purchase of Tiffany last September,

Mr. Trapani was the CEO of Italian luxury goods retailer Bulgari from 1984 until its sale to LVMH in 2011. LVMH operates a collection of luxury “houses” or brands including Louis Vuitton, Fendi, Bvlgari and Tag Heuer. Mr. Trapani joined the board of Tiffany earlier this year when the company expanded its board of directors from 10 to 13 members in an agreement with activist hedge fund JANA Partners.

Both Tiffany and Signet Jewelers (SIG) recently reported earning that beat estimates both on the top and bottom lines, propelling both stocks higher.

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

P/E: 34.05 Forward P/E: 22.63 Industry P/E: 29.18
P/S: 3.4 Price/Book: 4.92 EV/EBITDA: 14.25
Market Cap: $15.04B Avg. Daily Volume: 1,598,087 52 Week Range: $86.15 – $141.64

3. Builders FirstSource, Inc. (BLDR): $15.96

Shares of this building materials company were acquired by 2 insiders:

  • Director Paul S. Levy acquired 100,000 shares, paying $15.98 per share for a total amount of $1.59 million. Mr. Levy increased his stake by 9.82% to 1,117,984 shares with this purchase.
  • Director David Barr acquired 60,000 shares, paying $15.63 per share for a total amount of $937,800. Mr. Barr increased his stake by 307.76% to 79,496 shares with this purchase.

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

P/E: 24.07 Forward P/E: 7.19 Industry P/E: 23.2
P/S: 0.25 Price/Book: 3.97 EV/EBITDA: 9.23
Market Cap: $1.83B Avg. Daily Volume: 1,090,009 52 Week Range: $15.26 – $23.28

4. Veoneer, Inc. (VNE): $53.5

Chief Executive Officer Jan Carlson acquired 50,000 shares of this auto parts company, paying $50.65 per share for a total amount of $2.53 million.

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

P/E: N/A Forward P/E: -31.1 Industry P/E: 19.9
P/S: 2.00 Price/Book: 2.34 EV/EBITDA: 718.42
Market Cap: $4.66B Avg. Daily Volume: 574,204 52 Week Range: $42.57 – $9250

5. Allergan plc (AGN): $190.24

Shares of this drug manufacturer were acquired by 3 insiders:

  • Director Christopher J. Coughlin acquired 10,000 shares, paying $190.64 per share for a total amount of $1.91 million. Mr. Coughlin increased his stake by 155.50% to 16,431 shares with this purchase.
  • Director Thomas C. Freyman acquired 1,100 shares, paying $190.69 per share for a total amount of $209,759. Mr. Freyman increased his stake by 70.60% to 2,658 shares with this purchase.
  • Director Joseph H. Boccuzi acquired 900 shares, paying $190.59 per share for a total amount of $171,531. Mr. Boccuzi increased his stake by 30.15% to 3,885 shares with this purchase.

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

P/E: N/A Forward P/E: 11.34 Industry P/E: 29.61
P/S: 3.99 Price/Book: 0.91 EV/EBITDA: 11.89
Market Cap: $64.58B Avg. Daily Volume: 1,777,080 52 Week Range: $142.81 – $237.41

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $163.04

Shares of Facebook were sold by 3 insiders:

  • COB and CEO Mark Zuckerberg sold 407,000 shares for $177.05, generating $72.06 million from the sale. These shares were sold indirectly by various entities.
  • Chief Product Officer Christopher K. Cox sold 5,300 shares for $171.28, generating $907,786 from the sale.
  • VP and General Counsel Colin Stretch sold 750 shares for $168.85, generating $126,638 from the sale.

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

P/E: 25.23 Forward P/E: 19.55 Industry P/E: 65.77
P/S: 9.71 Price/Book: 5.94 EV/EBITDA: 15.64
Market Cap: $470.73B Avg. Daily Volume: 25,416,092 52 Week Range: $149.02 – $218.62

2. Walmart Inc. (WMT): $95.83

Shares of Walmart were sold by 2 insiders:

  • Director Robson S. Walton sold 230,500 shares for $95.71, generating $22.06 million from the sale.
  • Executive Vice President Judith J. Mckenna sold 12,111 shares for $96.31, generating $1.17 million from the sale.

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

P/E: 54.82 Forward P/E: 19.72 Industry P/E: 89.01
P/S: 0.55 Price/Book: 3.97 EV/EBITDA: 9.85
Market Cap: $280.66B Avg. Daily Volume: 7,814,630 52 Week Range: $77.5 – $109.98

3. CarGurus, Inc. (CARG): $47.68

Shares of this online auto shopping company were sold by 3 insiders:

  • Director Anastasios Parafestas sold 240,000 shares for $48.38, generating $11.61 million from the sale.
  • CEO, President and Chairman Langley Steinert sold 176,109 shares for $48.16, generating $8.48 million from the sale. 17,610 of these shares were sold indirectly through a trust.
  • Chief Technology Officer Oliver Ian Chrzan sold 6,000 shares for $49.11, generating $294,660 from the sale.

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

P/E: 116.01 Forward P/E: 153.81 Industry P/E: 65.77
P/S: 13.64 Price/Book: 33.34 EV/EBITDA: 392.81
Market Cap: $5.22B Avg. Daily Volume: 882,673 52 Week Range: $25.85 – $56.17

4. Proofpoint, Inc. (PFPT): $116.89

Shares of this software application company were sold by 4 insiders:

  • Chief Executive Officer Gary Steele sold 100,000 shares for $62.54, generating $6.25 million from the sale. 16,114 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Financial Officer Paul R. Auvil III sold 40,002 shares for $116.05, generating $4.64 million from the sale. 5,000 of these shares were sold as a result of exercising options immediately prior to the sale.
  • EVP & GM, Protection Bhagwat Swaroop sold 1,634 shares for $117.93, generating $192,698 from the sale.
  • EVP/GM, Threat Sys Product Grp David Knight sold 1,500 shares for $116.45, generating $174,674 from the sale.

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

P/E: N/A Forward P/E: 68.76 Industry P/E: 26.69
P/S: 10.05 Price/Book: 20.14 EV/EBITDA: -168.58
Market Cap: $6.14B Avg. Daily Volume: 884,861 52 Week Range: $82.6 – $130.27

5. Alphabet Inc. (GOOG): $1164.83

Shares of Alphabet were sold by 3 insiders:

  • CEO, Google LLC Sundar Pichai sold 10,000 shares for $1192.12, generating $11.92 million from the sale.
  • VP, Chief Accounting Officer Amie Thuener O’toole sold 80 shares for $1193.80, generating $95,504 from the sale.
  • Director Ann Mather sold 24 shares for $1206.20, generating $28,949 from the sale.

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

P/E: 50.31 Forward P/E: 24.28 Industry P/E: 65.77
P/S: 6.57 Price/Book: 5.00 EV/EBITDA: 18.64
Market Cap: $814.08B Avg. Daily Volume: 1,420,355 52 Week Range: $909.7 – $1273.89

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 Signet Jewelers (SIG). 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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