Welcome to edition 457 of Insider Weekends. Insider buying declined again last week with insiders purchasing $53.36 million of stock compared to $80.53 million in the week prior. Selling also decreased with insiders selling $1.58 billion of stock last week compared to $2.37 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 edged up slightly to 29.56. In other words, insiders sold almost 30 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 29.38.
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. Revlon, Inc. (REV): $21.68
Director Ronald O. Perelman acquired 355,000 shares of this beauty care products company, paying $19.90 per share for a total amount of $7.07 million. These shares were purchased indirectly by by MacAndrews & Forbes Incorporated.
Revlon’s stock dropped sharply earlier this month after the company reported disappointing fourth quarter results where revenue declined 5.7%. What spooked investors even more was the company’s decision to delay the filing of its annual report after disclosing that “it identified a material weakness in its internal control over financial reporting as of year-end 2018”. The stock started the month at $26.52 and dropped to $18.02 by March 19th. Mr. Perelman’s purchases took place on March 20th and 21st and the stock rebounded nearly 20% through the end of last week even in a weak market as you can see from the chart below.
With these latest purchases, Perelman increased his stake in Revlon to over 86% of the company. We have written about Revlon several times in the past including in September 2017 following a $10.85 million purchase by Mr. Perelman when we wrote,
Revlon’s second largest shareholder, Mittleman Brothers, was probably worried about Mr. Perelman taking the company private and wrote this letter to the CEO and the board urging them to obtain a standstill agreement from Mr. Perelman so that he does not increase his stake to 90% and then attempt to take the company private via a short-form merger.
Mr. Perelman responded on September 15th and according to this letter indicated,
MacAndrews & Forbes presently does not intend to increase its beneficial ownership above 89% of the issued and outstanding Revlon Class A Common Stock (“Common Stock”) or to undertake transactions to take Revlon private.Should MacAndrews & Forbes determine to undertake transactions to increase its beneficial ownership above 89% of the issued and outstanding Common Stock or to take Revlon private, MacAndrews & Forbes agrees to:(1) notify the Board at least 5 business days in advance of such transactions; and, prior to consummating such transactions,(2) convene a Board meeting;(3) support the creation of a special committee of independent directors empowered to select its own advisors; and(4) negotiate with that special committee regarding the terms of such transactions by MacAndrews & Forbes, in order to promote the interests of all shareholders, including minority shareholders.The agreement in this paragraph shall terminate on the first anniversary of the date hereof, unless extended in writing by MacAndrews & Forbes prior to such date.For the avoidance of doubt, this letter should not be construed as an admission by MacAndrews & Forbes that any of the assertions made in the Mittleman Letter have any merit whatsoever.
You can view the list of recent insider transactions for Revlon, Inc. here.
P/E: N/A | Forward P/E: -11.23 | Industry P/E: 70.62 |
P/S: 0.44 | Price/Book: N/A | EV/EBITDA: 41.03 |
Market Cap: $1.15B | Avg. Daily Volume: 140,647 | 52 Week Range: $14 – $29.62 |
2. Equitrans Midstream Corporation (ETRN): $20.28
President and CEO Thomas F. Karam acquired 250,000 shares of this natural gas pipeline company, paying $20.47 per share for a total amount of $5.12 million. These shares were purchased indirectly by E.T. Associates, L.P.
Equitrans Midstream was spun out of EQT Corporation (EQT) “to separate its separately managed gathering, transmission and storage, and water services operations (Midstream Business) from its natural gas, oil and natural gas liquids development, production and sales and commercial operations (Upstream Business).”
The spinoff was affected late last year and EQT maintained a nearly 20% interest in ETRN after issuing 0.8 shares of ETRN for each share of EQT held. If you subscribe to Joel Greenblatt’s philosophy of paying attention to spinoffs and following the actions of the insiders of the new spinoff, then this purchase appears to be bullish. Mr. Karam started his career in investment banking and later served as the CEO of three companies in the oil and natural gas industry that were eventually acquired.
You can view the list of recent insider transactions for Equitrans Midstream Corporation here.
P/E: 23.64 | Forward P/E: 10.19 | Industry P/E: 621.21 |
P/S: 3.45 | Price/Book: 11.27 | EV/EBITDA: 11.79 |
Market Cap: $5.16B | Avg. Daily Volume: 1,988,334 | 52 Week Range: $17.63 – $23.47 |
3. Select Medical Holdings Corporation (SEM): $14.04
Vice Chairman and Co-Founder Rocco A. Ortenzio acquired 306,189 shares of this medical care company, paying $14.18 per share for a total amount of $4.34 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Select Medical Holdings Corporation here.
P/E: 13.76 | Forward P/E: 11.7 | Industry P/E: 28.59 |
P/S: 0.37 | Price/Book: 2.36 | EV/EBITDA: 9.65 |
Market Cap: $1.9B | Avg. Daily Volume: 754,495 | 52 Week Range: $13.54 – $21.65 |
4. RCM Technologies, Inc. (RCMT): $4
Executive Chairman & President Bradley Vizi acquired 637,000 shares of this engineering & construction company, paying $3.92 per share for a total amount of $2.49 million. These shares were purchased indirectly by various trusts and entities.
You can view the list of recent insider transactions for RCM Technologies, Inc. here.
P/E: 18.18 | Forward P/E: 9.09 | Industry P/E: 15.58 |
P/S: 0.26 | Price/Book: 1.88 | EV/EBITDA: 9.06 |
Market Cap: $51.49M | Avg. Daily Volume: 23,634 | 52 Week Range: $2.54 – $5.9 |
5. Cadence Bancorporation (CADE): $17.77
Shares of this regional bank were acquired by 8 insiders:
You can view the list of recent insider transactions for Cadence Bancorporation here.
P/E: 9.02 | Forward P/E: 7.4 | Industry P/E: 19.52 |
P/S: 4.99 | Price/Book: 1.02 | EV/EBITDA: N/A |
Market Cap: $2.34B | Avg. Daily Volume: 1,685,798 | 52 Week Range: $16.13 – $31.442 |
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Walmart Inc. (WMT): $98.28
Shares of Walmart were sold by 2 insiders:
You can view the list of recent insider transactions for Walmart Inc. here.
P/E: 43.49 | Forward P/E: 19.66 | Industry P/E: 37.02 |
P/S: 0.56 | Price/Book: 3.93 | EV/EBITDA: 10.48 |
Market Cap: $285.53B | Avg. Daily Volume: 7,824,006 | 52 Week Range: $81.78 – $106.21 |
2. Ulta Beauty, Inc. (ULTA): $330.52
Shares of this beauty products retailer were sold by 9 insiders:
You can view the list of recent insider transactions for Ulta Beauty, Inc. here.
P/E: 30.21 | Forward P/E: 22.17 | Industry P/E: 43.08 |
P/S: 2.92 | Price/Book: 10.72 | EV/EBITDA: 16.86 |
Market Cap: $19.6B | Avg. Daily Volume: 812,468 | 52 Week Range: $199.15 – $345.24 |
3. Workday, Inc. (WDAY): $191.08
Shares of this software application company were sold by 4 insiders:
You can view the list of recent insider transactions for Workday, Inc. here.
P/E: N/A | Forward P/E: 86.46 | Industry P/E: 34.27 |
P/S: 14.76 | Price/Book: 21.66 | EV/EBITDA: -174.23 |
Market Cap: $41.66B | Avg. Daily Volume: 2,007,640 | 52 Week Range: $117.24 – $200 |
4. Best Buy Co., Inc. (BBY): $70.11
Shares of Best Buy were sold by 6 insiders:
You can view the list of recent insider transactions for Best Buy Co., Inc. here.
P/E: 13.48 | Forward P/E: 11.74 | Industry P/E: 36.77 |
P/S: 0.44 | Price/Book: 5.7 | EV/EBITDA: 6.69 |
Market Cap: $18.87B | Avg. Daily Volume: 3,589,844 | 52 Week Range: $47.72 – $84.37 |
5. O’Reilly Automotive, Inc. (ORLY): $376.3
Shares of this auto parts retailer were sold by 2 insiders:
You can view the list of recent insider transactions for O’Reilly Automotive, Inc. here.
P/E: 23.37 | Forward P/E: 19 | Industry P/E: 30.48 |
P/S: 3.09 | Price/Book: 84.11 | EV/EBITDA: 15.77 |
Market Cap: $29.49B | Avg. Daily Volume: 689,480 | 52 Week Range: $217.64 – $394.42 |
You can view the full list of sales from this Insider Sales page.
Disclaimer: I hold a long position in Workday (WDAY). 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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