Insider Weekends: A Second Insider of UnitedHealth Purchases Shares

Welcome to edition 464 of Insider Weekends. Insider buying nearly doubled last week with insiders purchasing $109.5 million million of stock compared to $57.84 million in the week prior. Selling also increased with insiders selling $1.26 billion of stock last week compared to $1.17 billion in the week prior. A large part of the increase in insider buying was on account of Elon Musk buying $25 million worth of Tesla (TSLA) stock as seen by the bright green rectangle in the heat map below. However this purchase was as a result of his participating in the company’s latest secondary offering and not an open market purchase. We focus on open market purchases for the list of notable insider purchases each week and hence the Tesla purchase is not on the list this week.

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 11.51. In other words, insiders sold almost 12 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 20.3.

Insider Sector Heat Map May 10, 2019

Insider Sector Heat Map May 10, 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. MGM Resorts International (MGM): $25.63

Director Paul J. Salem acquired 800,000 shares of this casino operator, paying $25.40 per share for a total amount of $20.32 million.

Mr. Salem joined MGM’s board last year and was previous senior managing director at Providence Equity Partners, which along with a consortium including Sony and Comcast took MGM private in 2005. MGM declared bankruptcy in 2010 and Providence Equity was purported to have lost hundreds of millions of dollars of its investment in MGM.

You can view the list of recent insider transactions for MGM Resorts International here.

P/E: 54.53 Forward P/E: 15.08 Industry P/E: 19.94
P/S: 1.18 Price/Book: 2.03 EV/EBITDA: 12.64
Market Cap: $13.77B Avg. Daily Volume: 7,112,953 52 Week Range: $21.62 – $32.91

2. UnitedHealth Group Incorporated (UNH): $240.59

Chief Executive Officer David S. Wichmann acquired 20,000 shares of this health insurance provider, paying $231.79 per share for a total amount of $4.64 million. Mr. Wichmann increased his stake by 2.26% to 904,367 shares with this purchase.

This is the second week in a row UnitedHealth made our list following a $1.5 million purchase by a director last week. This is the first set of insider purchases we have seen at UnitedHealth in over 5 years.

You can view the list of recent insider transactions for UnitedHealth Group Incorporated here.

P/E: 18.68 Forward P/E: 14.48 Industry P/E: 18.49
P/S: 0.99 Price/Book: 4.43 EV/EBITDA: 12.8
Market Cap: $228.64B Avg. Daily Volume: 5,905,611 52 Week Range: $208.07 – $287.94

3. Kinder Morgan, Inc. (KMI): $19.7

Executive Chairman Richard D. Kinder acquired 200,000 shares of this oil & gas pipelines company, paying $19.47 per share for a total amount of $3.89 million. Mr. Kinder increased his stake by 0.08% to 240,401,954 shares with this purchase.

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

P/E: 28.47 Forward P/E: 17.91 Industry P/E: 19.75
P/S: 3.15 Price/Book: 1.33 EV/EBITDA: 12.95
Market Cap: $44.6B Avg. Daily Volume: 14,841,935 52 Week Range: $14.62 – $20.44

4. Community Health Systems, Inc. (CYH): $3.45

Chairman & CEO Wayne T. Smith acquired 1,000,000 shares of this acute care hospitals operator, paying $3.37 per share for a total amount of $3.37 million. Mr. Smith increased his stake by 61.11% to 2,636,482 shares with this purchase.

This is a sizable purchase considering the market cap of the company is just $393 million. The company is however highly leveraged and the enterprise value is over $14 billion. The stock lost more than 90% of its value over the last four years and the company has reported losses in six of the last eight quarters.

You can view the list of recent insider transactions for Community Health Systems, Inc. here.

P/E: N/A Forward P/E: -3.42 Industry P/E: 27.89
P/S: 0.03 Price/Book: N/A EV/EBITDA: 10.52
Market Cap: $392.74M Avg. Daily Volume: 2,261,054 52 Week Range: $2.48 – $5.35

5. Annaly Capital Management, Inc. (NLY): $9.62

Chairman, CEO & President Kevin Keyes acquired 300,000 shares of this mortgage REIT, paying $9.62 per share for a total amount of $2.89 million. Mr. Keyes increased his stake by 30.46% to 1,284,779 shares with this purchase.

You can view the list of recent insider transactions for Annaly Capital Management, Inc. here.

P/E: N/A Forward P/E: 8.51 Industry P/E: 67.2
P/S: -12.46 Price/Book: 1 EV/EBITDA: N/A
Market Cap: $14.01B Avg. Daily Volume: 14,322,332 52 Week Range: $9.52 – $10.78

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

Notable Insider Sales:

1. Paylocity Holding Corporation (PCTY): $97.46

Director Steven I. Sarowitz sold 222,500 shares of this payroll and HCM software company for $95.14, generating $21.17 million from the sale.

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

P/E: 127.9 Forward P/E: 59.43 Industry P/E: 32.53
P/S: 11.63 Price/Book: 18.03 EV/EBITDA: 83.72
Market Cap: $5.16B Avg. Daily Volume: 306,743 52 Week Range: $52.93 – $99.8

2. American Financial Group, Inc. (AFG): $103.13

Shares of this insurance company were sold by 2 insiders:

  • Co-CEO & Co-President Carl H. Lindner III sold 163,012 shares for $102.96, generating $16.78 million from the sale. These shares were sold indirectly through a trust.
  • Co-CEO & Co-President Craig S. Lindner sold 30,000 shares for $102.75, generating $3.08 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for American Financial Group, Inc. here.

P/E: 13.09 Forward P/E: 11.64 Industry P/E: 10.48
P/S: 1.26 Price/Book: 1.63 EV/EBITDA: 8.64
Market Cap: $9.25B Avg. Daily Volume: 353,541 52 Week Range: $84.18 – $114.8

3. Apple Inc. (AAPL): $197.18

Shares of Apple were sold by 2 insiders:

  • COO Jeffrey E. Williams sold 56,411 shares for $210.36, generating $11.87 million from the sale.
  • Director Arthur D. Levinson sold 35,000 shares for $210.86, generating $7.38 million 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 Apple Inc. here.

P/E: 16.59 Forward P/E: 15.38 Industry P/E: 6.68
P/S: 3.51 Price/Book: 8.58 EV/EBITDA: 12.15
Market Cap: $907.24B Avg. Daily Volume: 27,675,783 52 Week Range: $142 – $233.47

4. CarGurus, Inc. (CARG): $39.25

Shares of this online auto shopping provider were sold by 2 insiders:

  • CEO and Chairman Langley Steinert sold 234,812 shares for $40.32, generating $9.47 million from the sale. 23,480 of these shares were sold indirectly through a trust.
  • Director Anastasios Parafestas sold 127,348 shares for $40.31, generating $5.13 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 62.3 Forward P/E: 70.09 Industry P/E: 41.83
P/S: 8.88 Price/Book: 20.66 EV/EBITDA: 147.38
Market Cap: $4.36B Avg. Daily Volume: 854,433 52 Week Range: $30.29 – $57.25

5. Northrop Grumman Corporation (NOC): $300.8

Chairman Wesley G. Bush sold 50,000 shares of this aerospace & defense company for $291.59, generating $14.58 million from the sale.

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

P/E: 16.04 Forward P/E: 13.49 Industry P/E: 35.54
P/S: 1.62 Price/Book: 5.85 EV/EBITDA: 12.97
Market Cap: $51.08B Avg. Daily Volume: 900,788 52 Week Range: $223.63 – $340.14

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 Apple (AAPL). 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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