Insider Weekends: Cluster of Purchases by Insiders of Encana

Welcome to edition 438 of Insider Weekends. Insider buying decreased last week with insiders purchasing $106.85 million of stock compared to $114.46 million in the week prior. Selling almost doubled with insiders selling $1.09 billion of stock last week compared to $577.49 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 10.23. In other words, insiders sold more than 10 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 5.05.

Insider Sector Heat Map November 9, 2018

Insider Sector Heat Map November 9, 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): $20.52

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

  • Director Tamara Hughes Gustavson acquired 991,100 shares, paying $20.18 per share for a total amount of $19.99 million. Ms. Gustavson increased her stake by 6.27% to 16,794,998 shares with this purchase.
  • Director B. Wayne Hughes acquired 991,100 shares, paying $20.18 per share for a total amount of $19.99 million.

The father-daughter team are at it again purchasing shares of American Homes 4 Rent as they have done several times over the last few years.

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.

After additional purchases by this father-daughter team this September, we also wrote the following and published a special report for premium subscribers,

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: 85.5 Industry P/E: 35.07
P/S: 7.13 Price/Book: 1.18 EV/EBITDA: 18.8
Market Cap: $7.22B Avg. Daily Volume: 2,268,850 52 Week Range: $18.39 – $23.34

2. Platform Specialty Products Corporation (PAH): $11.07

Shares of this specialty chemicals company were acquired by 3 insiders:

  • Director Martin E. Franklin acquired 549,000 shares, paying $10.97 per share for a total amount of $6.02 million.
  • Director Ian G. Ashken acquired 122,000 shares, paying $10.97 per share for a total amount of $1.34 million. These shares were purchased indirectly by IGHA Holdings, LLLP.
  • EVP, General Counsel & Sec. John Edward Capps acquired 46,000 shares, paying $10.92 per share for a total amount of $502,550. Mr. Capps increased his stake by 197.15% to 69,333 shares with this purchase.

You can view the list of recent insider transactions for Platform Specialty Products Corporation here.

P/E: N/A Forward P/E: 13.84 Industry P/E: 26.38
P/S: 0.81 Price/Book: 1.26 EV/EBITDA: 10.02
Market Cap: $3.19B Avg. Daily Volume: 2,850,265 52 Week Range: $9.09 – $13.54

3. Encana Corporation (ECA): $8.85

Shares of this oil & gas exploration and production company were acquired by 12 insiders:

  • Director Clayton Harvey Woitas acquired 100,000 shares, paying $8.78 per share for a total amount of $878,000. Mr. Woitas increased his stake by 71.43% to 240,000 shares with this purchase.
  • President and CEO Douglas James Suttles acquired 50,000 shares, paying $8.83 per share for a total amount of $441,500. Mr. Suttles increased his stake by 59.37% to 134,212 shares with this purchase.
  • Director Bruce Gordon Waterman acquired 50,000 shares, paying $8.72 per share for a total amount of $436,250. Mr. Waterman increased his stake by 40.00% to 175,000 shares with this purchase.
  • Director Peter A. Dea acquired 34,168 shares, paying $8.78 per share for a total amount of $299,995. These shares were purchased indirectly by Peter A. Dea & Cathy L. Carpenter.
  • EVP and CFO Sherri Anne Brillon acquired 20,000 shares, paying $8.83 per share for a total amount of $176,560. Ms. Brillon increased her stake by 21.24% to 114,165 shares with this purchase.
  • EVP & COO Michael Gerard Mcallister acquired 14,155 shares, paying $8.76 per share for a total amount of $123,974. Mr. Mcallister increased his stake by 83.16% to 31,177 shares with this purchase.
  • EVP, Midstream, Marketing & Fundamentals Renee Ellen Zemljak acquired 10,000 shares, paying $8.78 per share for a total amount of $87,800. Ms. Zemljak increased her stake by 65.34% to 25,304 shares with this purchase.
  • Director Howard John Mayson acquired 10,000 shares, paying $8.74 per share for a total amount of $87,400. Mr. Mayson increased his stake by 39.83% to 35,104 shares with this purchase.
  • EVP, Corp Services Michael Williams acquired 5,000 shares, paying $8.77 per share for a total amount of $43,850. Mr. Williams increased his stake by 44.94% to 16,125 shares with this purchase.
  • Director Brian Gordon Shaw acquired 5,000 shares, paying $8.90 per share for a total amount of $44,500. Mr. Shaw increased his stake by 50.00% to 15,000 shares with this purchase.
  • Director Suzanne P. Nimocks acquired 2,500 shares, paying $8.83 per share for a total amount of $22,075. Ms. Nimocks increased her stake by 23.58% to 13,100 shares with this purchase.
  • EVP & General Counsel Joanne Linette Alexander acquired 2,500 shares, paying $8.86 per share for a total amount of $22,150. Ms. Alexander increased her stake by 67.62% to 6,197 shares with this purchase.

This is another interesting purchase this week where insiders of Encana stepped in to buy shares after the double whammy of lower oil prices and their decision to buy Newfield Exploration (NFX) in an all-stock deal hurt shares and pushed them close to a fresh 52 week low. The article Encana: 9 Reasons To Buy Post-Newfield Acquisition makes an interesting case for exploring Encana further, especially in light of these insider purchases.

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

P/E: 132.09 Forward P/E: 7.97 Industry P/E: 17.61
P/S: 1.82 Price/Book: 1.3 EV/EBITDA: 9.3
Market Cap: $8.42B Avg. Daily Volume: 14,223,173 52 Week Range: $8.43 – $14.31

4. Churchill Downs Incorporated (CHDN): $265

Shares of this horse racing and casino gaming company were acquired by 2 insiders:

  • Director Richard L. Duchossois acquired 9,250 shares, paying $271.93 per share for a total amount of $2.52 million. These shares were purchased indirectly by a trust.
  • Director R. Alex Rankin acquired 400 shares, paying $271.19 per share for a total amount of $108,478. Mr. Rankin increased his stake by 3.41% to 12,137 shares with this purchase.

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

P/E: 11.53 Forward P/E: 20.61 Industry P/E: 45.85
P/S: 3.71 Price/Book: 7.89 EV/EBITDA: 14.45
Market Cap: $3.51B Avg. Daily Volume: 96,821 52 Week Range: $211.2 – $314.6

5. General Electric Company (GE): $8.58

Shares of General Electric were acquired by 2 insiders:

  • Chairman and CEO Lawrence H. Culp acquired 225,000 shares, paying $9.73 per share for a total amount of $2.19 million.
  • Senior Vice President Alexander Dimitrief acquired 10,000 shares, paying $9.48 per share for a total amount of $94,800. Mr. Dimitrief increased his stake by 10.74% to 103,075 shares with this purchase.

You can view the list of recent insider transactions for General Electric Company here.

P/E: N/A Forward P/E: 9.86 Industry P/E: 20.93
P/S: 0.6 Price/Book: 1.35 EV/EBITDA: 40.77
Market Cap: $74.63B Avg. Daily Volume: 97,138,695 52 Week Range: $8.15 – $20.75

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

Notable Insider Sales:

1. Garmin Ltd. (GRMN): $66.11

Executive Chairman Min H. Kao sold 479,645 shares of this GPS manufacturer for $64.82, generating $31.09 million from the sale. These shares were sold indirectly by Mr. Kao’s children.

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

P/E: 20.85 Forward P/E: 18.89 Industry P/E: 45.4
P/S: 3.88 Price/Book: 3.32 EV/EBITDA: 13.47
Market Cap: $12.48B Avg. Daily Volume: 1,182,625 52 Week Range: $57.01 – $70.77

2. The Chefs’ Warehouse, Inc. (CHEF): $35.06

Shares of this food distribution company were sold by 2 insiders:

  • Vice Chairman John Pappas sold 292,289 shares for $35.03, generating $10.24 million from the sale.
  • President and CEO Christopher Pappas sold 200,000 shares for $36.95, generating $7.39 million from the sale.

You can view the list of recent insider transactions for The Chefs’ Warehouse, Inc. here.

P/E: 49.66 Forward P/E: 35.41 Industry P/E: 64.32
P/S: 0.77 Price/Book: 3.93 EV/EBITDA: 19.41
Market Cap: $1.05B Avg. Daily Volume: 410,129 52 Week Range: $17.25 – $39.26

3. CarGurus, Inc. (CARG): $42.03

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

  • CEO, President and Chairman Langley Steinert sold 293,515 shares for $43.08, generating $12.64 million from the sale. 29,350 of these shares were sold indirectly through a trust.
  • Director Anastasios Parafestas sold 69,064 shares for $42.69, generating $2.95 million from the sale. These shares were sold indirectly by various trusts and entities.
  • Chief Technology Officer Oliver Ian Chrzan sold 6,000 shares for $45.14, generating $270,859 from the sale.

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

P/E: 102.26 Forward P/E: 116.75 Industry P/E: 34.43
P/S: 12.02 Price/Book: 29.39 EV/EBITDA: 340.48
Market Cap: $4.6B Avg. Daily Volume: 1,037,912 52 Week Range: $28 – $57.25

4. Ollie’s Bargain Outlet Holdings, Inc. (OLLI): $91.28

President, CEO Mark L. Butler sold 150,000 shares of this retailer for $90.70, generating $13.6 million from the sale.

You can view the list of recent insider transactions for Ollie’s Bargain Outlet Holdings, Inc. here.

P/E: 40.12 Forward P/E: 43.67 Industry P/E: 34.86
P/S: 4.94 Price/Book: 6.64 EV/EBITDA: 34.16
Market Cap: $5.72B Avg. Daily Volume: 659,937 52 Week Range: $42.36 – $97.61

5. Palo Alto Networks, Inc. (PANW): $183.09

Shares of this software application company were sold by 2 insiders:

  • Director Mark D. McLaughlin sold 40,000 shares for $184.23, generating $7.37 million from the sale.
  • EVP, Chief Technology Officer Nir Zuk sold 30,000 shares for $186.20, generating $5.59 million from the sale.

You can view the list of recent insider transactions for Palo Alto Networks, Inc. here.

P/E: N/A Forward P/E: 30.06 Industry P/E: 34.42
P/S: 7.6 Price/Book: 17.73 EV/EBITDA: 2616.51
Market Cap: $17.27B Avg. Daily Volume: 1,336,189 52 Week Range: $135.85 – $239.5

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 positions in AMH and GE. 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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