Insider Weekends: CEO of Redfin Glenn Kelman Makes His First Insider Purchase

Welcome to edition 453 of Insider Weekends. Insider buying decreased last week with insiders purchasing $53.99 million of stock compared to $60.85 million in the week prior. Selling on the other hand increased with insiders selling $1.86 billion of stock last week compared to $1.29 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 34.43. In other words, insiders sold more than 34 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 21.33. 

Insider Sector Heat Map February 22, 2019

Insider Sector Heat Map February 22, 2019 (click to enlarge)

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. Kinder Morgan, Inc. (KMI): $19.32

Executive Chairman Richard D. Kinder acquired 519,112 shares of this oil & gas pipelines company, paying $19.05 per share for a total amount of $9.89 million. Mr. Kinder increased his stake by 0.22% to 237,011,657 shares with this purchase.

This is the fourth week in a row KMI has made our list of top insider purchases. The only other company with this level of consistent insider buying recently has been DISH Network (DISH) with its Co-founder and EVP purchasing shares almost every week since mid-September.

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

P/E: 29.05 Forward P/E: 17.72 Industry P/E: 45.32
P/S: 3.09 Price/Book: 1.3 EV/EBITDA: 12.59
Market Cap: $43.73B Avg. Daily Volume: 16,304,543 52 Week Range: $14.62 – $19.47

2. Summit Materials, Inc. (SUM): $17.54

President & CEO Thomas W. Hill acquired 31,250 shares of this building materials company, paying $16.25 per share for a total amount of $507,813. Mr. Hill increased his stake by 29.93% to 135,652 shares with this purchase.

After a big decline in Summit Materials and its fellow building products company Mohawk Industries (MHK) over the last year, we saw several insiders of both companies buy shares from August through December 2018. Mr. Hill is a little late to the party and this is his first purchase since the company went public in March 2015. He consistently sold stock from April 2016 through mid-2018. Both Mohawk and Summit are highly acquisitive companies and as a result have ended up with leveraged balance sheets, although the smaller Summit Materials is more leveraged and enjoys lower operating margins compared to Mohawk. Incidentally Mohawk is also the cheaper of the two.

Despite a rebound in both stocks this year, they are trailing the S&P 500 significantly over the last year as you can see from the chart below.

Summit and Mohawk 1 Year Chart

Summit and Mohawk 1 Year Chart (click to enlarge)

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

P/E: 58.47 Forward P/E: 14.62 Industry P/E: 23.81
P/S: 0.96 Price/Book: 1.48 EV/EBITDA: 9.56
Market Cap: $2.02B Avg. Daily Volume: 1,950,867 52 Week Range: $11.25 – $33.02

3. Redfin Corporation (RDFN): $19.71

President and CEO Glenn Kelman acquired 25,532 shares of this real estate services company, paying $19.56 per share for a total amount of $499,495. Mr. Kelman increased his stake by 1.28% to 2,014,973 shares with this purchase.

This is the first management purchase of Redfin since the company went public at $15/share in mid-2017. The stock soared nearly 45% on its first day of trading and eventually went on to more than double by the end of 2017 before starting a long decline that saw the stock drop below its IPO price last December. Both Redfin and Zillow (Z) are down nearly 6% over the last year. Zillow rebounded 26% on Friday after the company announced that Co-founder and former CEO Rich Barton was returning as CEO. We wrote about Rich Barton and Jay Hoag’s insider  purchases of Zillow last November.

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

P/E: N/A Forward P/E: -28.57 Industry P/E: 19.74
P/S: 3.66 Price/Book: 4.78 EV/EBITDA: -42.13
Market Cap: $1.78B Avg. Daily Volume: 872,667 52 Week Range: $13.5 – $26.01

4. EQT Corporation (EQT): $19.31

Shares of this natural gas production company were acquired by 3 insiders:

  • SVP, Human Resources David Joseph Smith acquired 16,800 shares, paying $19.06 per share for a total amount of $320,208. Mr. Smith increased his stake by 66.40% to 42,102 shares with this purchase.
  • General Counsel & SVP Jonathan M. Lushko acquired 7,903 shares, paying $19.04 per share for a total amount of $150,473. Mr. Lushko increased his stake by 29.76% to 34,456 shares with this purchase.
  • President & CEO Robert Joseph McNally acquired 1,496 shares, paying $19.10 per share for a total amount of $28,574. These shares were purchased indirectly by a Savings Plan.

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

P/E: N/A Forward P/E: 41.09 Industry P/E: 4.6
P/S: 1.04 Price/Book: 0.45 EV/EBITDA: 6.55
Market Cap: $4.91B Avg. Daily Volume: 5,608,832 52 Week Range: $16.29 – $31.2412

5. Invesco Ltd. (IVZ): $19.05

Director Rod Canion acquired 20,000 shares of this asset management company, paying $18.89 per share for a total amount of $377,800. Mr. Canion increased his stake by 31.03% to 84,451 shares with this purchase.

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

P/E: 8.9 Forward P/E: 7.78 Industry P/E: 18.48
P/S: 1.47 Price/Book: 0.91 EV/EBITDA: 9.67
Market Cap: $7.84B Avg. Daily Volume: 5,024,998 52 Week Range: $15.38 – $35.03

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

Notable Insider Sales:

1. Walmart Inc. (WMT): $99.55

Shares of Walmart were sold by 3 insiders:

  • Director Robson S. Walton sold 1,855,869 shares for $99.56, generating $184.78 million from the sale. These shares were sold indirectly through a trust.
  • Executive Vice President John R. Furner sold 10,427 shares for $101.81, generating $1.06 million from the sale.
  • Executive Vice President Jacqueline P. Canney sold 980 shares for $99.03, generating $97,046 from the sale.

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

P/E: 44.05 Forward P/E: 19.87 Industry P/E: 40.61
P/S: 0.56 Price/Book: 3.98 EV/EBITDA: 10.83
Market Cap: $289.22B Avg. Daily Volume: 8,512,754 52 Week Range: $81.78 – $106.21

2. Northrop Grumman Corporation (NOC): $288.71

Shares of this aerospace & defense company were sold by 6 insiders:

  • Chairman Wesley G. Bush sold 86,500 shares for $287.28, generating $24.85 million from the sale. 7,311 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Corp VP, Government Relations Lesley A. Kalan sold 4,312 shares for $286.70, generating $1.24 million from the sale.
  • Corp VP, Controller & CAO Michael A. Hardesty sold 2,566 shares for $286.23, generating $734,469 from the sale. 428 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Corp VP & President AS Systems Janis G. Pamiljans sold 2,500 shares for $285.12, generating $712,796 from the sale.
  • Corp VP & Pres, Mission System Mark A. Caylor sold 1,065 shares for $286.84, generating $305,482 from the sale.
  • CVP & Chief S&T Ofcr Patrick M. Antkowiak sold 432 shares for $288.38, generating $124,580 from the sale.

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

P/E: 15.61 Forward P/E: 13.06 Industry P/E: 42.9
P/S: 1.63 Price/Book: 6.02 EV/EBITDA: 12.35
Market Cap: $49.01B Avg. Daily Volume: 1,325,273 52 Week Range: $223.63 – $360.88

3. Aon plc (AON): $172.06

Shares of this insurance company were sold by 4 insiders:

  • Chief Financial Officer Christa Davies sold 58,152 shares for $170.90, generating $9.94 million from the sale. 24,051 of these shares were sold as a result of exercising options immediately prior to the sale.
  • General Counsel Peter M. Lieb sold 15,068 shares for $172.77, generating $2.6 million from the sale.
  • Co-President Eric Andersen sold 5,000 shares for $142.39, generating $711,950 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Principal Accounting Officer Michael Neller sold 1,250 shares for $171.66, generating $214,575 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 Aon plc here.

P/E: 37.49 Forward P/E: 16.7 Industry P/E: 28.7
P/S: 3.85 Price/Book: 10.05 EV/EBITDA: 16.99
Market Cap: $41.44B Avg. Daily Volume: 1,123,437 52 Week Range: $134.82 – $173.53

4. Arrow Electronics, Inc. (ARW): $81.94

Shares of this electronics distribution company were sold by 4 insiders:

  • Chairman, President & CEO Michael J. Long sold 114,236 shares for $80.96, generating $9.25 million from the sale.
  • Director Andrew Charles Kerin sold 6,845 shares for $81.79, generating $559,853 from the sale.
  • Chief Supply Chain Officer Charles Kostalnick II sold 1,250 shares for $81.99, generating $102,487 from the sale.
  • Chief Strategy Officer Mary Catherine Morris sold 929 shares for $81.90, generating $76,085 from the sale.

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

P/E: 10.12 Forward P/E: 8.5 Industry P/E: 4
P/S: 0.23 Price/Book: 1.31 EV/EBITDA: 7.28
Market Cap: $6.96B Avg. Daily Volume: 571,818 52 Week Range: $62.69 – $83.71

5. Sage Therapeutics, Inc. (SAGE): $153.97

Director Steven M. Paul sold 51,004 shares of this biotech company for $161.04, generating $8.21 million from the sale. These shares were sold indirectly through various trusts.

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

P/E: N/A Forward P/E: -14.69 Industry P/E: 69.44
P/S: 80.57 Price/Book: 7.29 EV/EBITDA: -21.85
Market Cap: $7.25B Avg. Daily Volume: 593,448 52 Week Range: $79.88 – $188.82

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 Zillow (Z). 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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