Insider Weekends: Elon Musk Purchases $10 Million of Tesla Stock

Welcome to edition 437 of Insider Weekends. Insider buying increased last week with insiders purchasing $114.46 million of stock compared to $66.26 million in the week prior. Selling also increased with insiders selling $577.49 million of stock last week compared to $500.08 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 dropped to 5.05. In other words, insiders sold more than 5 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 7.55.

Insider Sector Heat Map November 2, 2018

Insider Sector Heat Map November 2, 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. Mohawk Industries, Inc. (MHK): $131.78

Shares of this home flooring products company were acquired by 2 insiders:

  • Director Filip Balcaen acquired 250,000 shares, paying $118.42 per share for a total amount of $29.6 million. These shares were purchased indirectly by Floorenter NV.
  • President-Flooring NA Brian Carson acquired 2,698 shares, paying $116.34 per share for a total amount of $313,877. Mr. Carson increased his stake by 13.68% to 22,415 shares with this purchase.

Mohawk is the world’s largest flooring manufacturer with sales in over 170 countries. Mohawk showed up on my radar earlier this year when I saw multiple purchases by Mr. Balcaen following a big drop in the stock price. His first set of purchases in May were at an average price of almost $210 and then he purchased again in July and August at prices in the low $180s. After his August purchases we wrote the following about the company,

High lumber prices and high oil prices combined with a strong dollar hurt results when the company reported second quarter earnings. While revenue was up 5.3% year-over-year to $2.58 billion, it missed estimates by $20 million. The bigger shock was earnings, which at $3.51/share missed estimates of $3.90/share by a wide margin. The stock plunged 17.51% to $179.31 the following day, one of its biggest one-day drops, pushing the stock to a new 52 week low.

With lumber prices peaking in May and oil prices declining in July, some of the headwinds the company faced in the second quarter may abate but other headwinds from a strong dollar and a tight labor market remain.

A few weeks ago, I asked our analyst to write a report on Mohawk as I was thinking about featuring the stock for premium members. After reading her report I was convinced that the best course of action was to hold off on buying the company. I felt that the company was probably too optimistic in thinking that it could offset some of the headwinds it was facing by increasing prices. A weakening housing market in the US and competition would make price increases challenging to execute.

This was before the steep decline the stock saw late last month when the stock dropped from $151.07 to $115.03 in a single day after the company once again reported disappointing third quarter earnings, which declined 12.26% year-over-year. The insiders managed to buy the stock near five year lows before it rebounded more than 10% off those lows.

Mohawk One Month Chart

Mohawk One Month Chart

The stock is undeniably cheap at current levels and is worth keeping an eye on if the company can arrest the earnings decline and return to organic revenue growth.

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

P/E: 11.32 Forward P/E: 10.91 Industry P/E: 33.25
P/S: 1 Price/Book: 1.33 EV/EBITDA: 7.36
Market Cap: $9.83B Avg. Daily Volume: 1,264,259 52 Week Range: $113.45 – $286.85

2. Tesla, Inc. (TSLA): $346.41

CEO Elon Musk acquired 29,844 shares of Tesla, paying $334.98 per share for a total amount of $9.99 million. These shares were purchased indirectly through a trust.

Mr. Musk also acquired nearly $10 million worth of stock in May of this year and an additional $24.9 million worth of stock in June. These were not options related exercises but open market purchases. The footnote of the latest form 4 filing indicates he also plans to purchase another $20 million of stock directly from the company next week. This direct purchase was disclosed a few weeks ago.

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

P/E: N/A Forward P/E: 59.32 Industry P/E: 14.22
P/S: 4.32 Price/Book: 15.12 EV/EBITDA: -135.06
Market Cap: $59.1B Avg. Daily Volume: 10,752,276 52 Week Range: $244.59 – $387.46

3. Cullen/Frost Bankers, Inc. (CFR): $100.01

Director Carlos Alvarez acquired 54,000 shares of this regional bank, paying $93.71 per share for a total amount of $5.06 million. Mr. Alvarez increased his stake by 14.59% to 424,000 shares with this purchase.

You can view the list of recent insider transactions for Cullen/Frost Bankers, Inc. here.

P/E: 16.02 Forward P/E: 13.95 Industry P/E: 17.14
P/S: 5.22 Price/Book: 2.02 EV/EBITDA: N/A
Market Cap: $6.4B Avg. Daily Volume: 429,857 52 Week Range: $90.02 – $121.66

4. KLX Energy Services Holdings, Inc. (KLXE): $28.63

Shares of this oil & gas equipment & services company were acquired by 3 insiders:

  • VP and General Manager Gary J. Roberts acquired 83,375 shares, paying $31.26 per share for a total amount of $2.61 million. Mr. Roberts increased his stake by 36.79% to 310,018 shares with this purchase.
  • Director John T. Collins acquired 10,000 shares, paying $29.56 per share for a total amount of $295,570. These shares were purchased indirectly through a trust.
  • VP Finance & Controller Heather Floyd acquired 6,385 shares, paying $31.48 per share for a total amount of $201,000. Mr. Floyd increased his stake by 482.62% to 7,708 shares with this purchase.

You can view the list of recent insider transactions for KLX Energy Services Holdings, Inc. here.

P/E: N/A Forward P/E: N/A Industry P/E: 118.84
P/S: 1.53 Price/Book: N/A EV/EBITDA: N/A
Market Cap: $631.73M Avg. Daily Volume: 606,522 52 Week Range: $27.71 – $36.13

5. Sarepta Therapeutics, Inc. (SRPT): $145.97

President & CEO Douglas S. Ingram acquired 16,695 shares of this biotech company, paying $120.39 per share for a total amount of $2 million. Mr. Ingram increased his stake by 4.18% to 415,945 shares with this purchase.

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

P/E: N/A Forward P/E: -50.33 Industry P/E: 84.8
P/S: 40.33 Price/Book: 13.85 EV/EBITDA: -49.83
Market Cap: $9.74B Avg. Daily Volume: 1,095,881 52 Week Range: $46.07 – $176.5

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

Notable Insider Sales:

1. Garmin Ltd. (GRMN): $66.15

Executive Chairman Min H. Kao sold 878,401 shares of this GPS manufacturer for $65.28, generating $57.34 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: 20.87 Forward P/E: 19.17 Industry P/E: 45.52
P/S: 3.88 Price/Book: 3.32 EV/EBITDA: 13.47
Market Cap: $12.49B Avg. Daily Volume: 1,176,095 52 Week Range: $57.01 – $70.77

2. Amazon.com, Inc. (AMZN): $1665.53

Chairman, CEO and President Jeffrey P. Bezos sold 20,164 shares of Amazon for $1636.63, generating $33 million from the sale.

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

P/E: 131.9 Forward P/E: 62.47 Industry P/E: 60.6
P/S: 3.91 Price/Book: 23.18 EV/EBITDA: 42.72
Market Cap: $814.39B Avg. Daily Volume: 5,895,810 52 Week Range: $1108.77 – $2050.5

3. Cerner Corporation (CERN): $56.72

Vice Chairman Clifford W. Illig sold 250,000 shares of this health information services company for $57.53, generating $14.38 million from the sale.

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

P/E: 22.67 Forward P/E: 21.09 Industry P/E: 41.05
P/S: 3.63 Price/Book: 3.82 EV/EBITDA: 15.83
Market Cap: $18.69B Avg. Daily Volume: 1,916,950 52 Week Range: $50.91 – $73.43

4. Zayo Group Holdings, Inc. (ZAYO): $29.89

CEO Daniel Caruso sold 337,079 shares of this communication equipment company for $29.67, generating $10 million from the sale. These shares were purchased indirectly by DPC Papa Bear Enterprises, LLC.

You can view the list of recent insider transactions for Zayo Group Holdings, Inc. here.

P/E: 72.9 Forward P/E: 49 Industry P/E: 21.28
P/S: 2.83 Price/Book: 4.95 EV/EBITDA: 11.13
Market Cap: $7.37B Avg. Daily Volume: 3,027,731 52 Week Range: $29.335 – $39.66

5. salesforce.com, inc. (CRM): $136.79

Shares of this software application company were sold by 5 insiders:

  • Chairman of the Board & co-CEO Marc Benioff sold 25,000 shares for $135.92, generating $3.39 million from the sale.
  • President and CFO Mark J. Hawkins sold 8,221 shares for $136.88, generating $1.13 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-Founder and CTO Parker Harris sold 5,711 shares for $130.92, generating $747,663 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Pres., Legal & General Counsel Amy E. Weaver sold 5,325 shares for $138.61, generating $738,098 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • co-CEO Keith Block sold 4,320 shares for $134.21, generating $579,766 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 salesforce.com, inc. here.

P/E: 142.64 Forward P/E: 50.11 Industry P/E: 20.46
P/S: 8.78 Price/Book: 7.65 EV/EBITDA: 97.41
Market Cap: $103.51B Avg. Daily Volume: 5,732,062 52 Week Range: $98.68 – $161.19

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: 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.

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