Insider Weekends: Cluster of Purchases by Insiders of Coty

Welcome to edition 465 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $385.5 million million of stock compared to $109.5 million in the week prior. Selling on the other hand decreased with insiders selling $1.15 billion of stock last week compared to $1.26 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 dropped to 2.98. In other words, insiders sold almost 3 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 11.51.

Insider Sector Heat Map May 17, 2019

Insider Sector Heat Map May 17, 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. Coty Inc. (COTY): $13.5

Shares of this cosmetics company were acquired by 6 insiders:

  • Director Peter Harf acquired 5,114,969 shares, paying $11.69 per share for a total amount of $59.79 million. 4,974,969 of these shares were purchased indirectly by HFS S.a.r.l.
  • Chief Executive Officer Pierre Laubies acquired 648,228 shares, paying $11.64 per share for a total amount of $7.54 million. Mr. Laubies increased his stake by 28.08% to 2,956,675 shares with this purchase.
  • Chief Global Supply Officer Luc Volatier acquired 451,263 shares, paying $11.51 per share for a total amount of $5.19 million.
  • Chief Financial Officer Pierre-Andre Terisse acquired 152,000 shares, paying $11.73 per share for a total amount of $1.78 million.
  • Chief Operating Officer, CB Giovanni Pieraccioni acquired 93,100 shares, paying $12.91 per share for a total amount of $1.2 million.
  • Director Olivier Goudet acquired 45,000 shares, paying $11.86 per share for a total amount of $533,597. Mr. Goudet increased his stake by 168.75% to 71,666 shares with this purchase.

This FT profile of Mr. Harf, the private equity group JAB and Coty is well worth a read. It partially explains why Coty shares rose more than 15% last week in a weak market. Insiders of Coty have been buying the stock for some time now and JAB has been adding to its stake over the years. Most investors who looked at the stock however tended to stay away despite this insider buying because of how poorly the company was run.

I still don’t share the insiders enthusiasm for the company as revenue has declined in three of the last four quarters and the company missed top line estimates in three of the last four quarters. I would like to see Mr. Harf’s focus translate into positive results for the company before I would get interested in Coty.

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

P/E: N/A Forward P/E: 19.01 Industry P/E: 72.87
P/S: 1.15 Price/Book: 1.35 EV/EBITDA: 13.57
Market Cap: $10.14B Avg. Daily Volume: 17,028,139 52 Week Range: $5.91 – $14.87

2. The AES Corporation (AES): $16.34

Director Jeffrey W. Ubben acquired 2,582,000 shares of this diversified power generation and utility company, paying $16.10 per share for a total amount of $41.58 million. These shares were purchased indirectly by ValueAct Spring Master Fund, L.P.

We normally exclude purchases by funds but decided to make an exception in this case because the purchase was by San Francisco based activist value-oriented fund ValueAct Capital. The firm manages $14 billion in assets and has a different brand of activism where they prefer to work with company managements rather than taking a public adversarial stance.

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

P/E: 16.15 Forward P/E: 11.27 Industry P/E: 14.62
P/S: 1.02 Price/Book: 3.35 EV/EBITDA: 9.53
Market Cap: $10.85B Avg. Daily Volume: 6,210,598 52 Week Range: $11.94 – $18.52

3. Symantec Corporation (SYMC): $19.84

Director Peter A. Feld acquired 2,000,000 shares of this software application company, paying $19.59 per share for a total amount of $39.17 million. These shares were purchased indirectly by Starboard Value and Opportunity Master Fund Ltd.

While we were in the process of making exceptions, we figured we would make another exception for another well-known value oriented fund, Starboard Value.

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

P/E: 461.4 Forward P/E: 10.67 Industry P/E: 32.53
P/S: 2.68 Price/Book: 2.2 EV/EBITDA: 12.17
Market Cap: $12.68B Avg. Daily Volume: 5,195,049 52 Week Range: $17.43 – $24.77

4. Qurate Retail, Inc. (QRTEA): $13.52

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

  • Director John C. Malone acquired 800,000 shares, paying $12.48 per share for a total amount of $9.99 million. Mr. Malone increased his stake by 4857.32% to 816,470 shares with this purchase.
  • President, CEO Michael A. George acquired 244,568 shares, paying $12.51 per share for a total amount of $3.06 million. Mr. George increased his stake by 14.43% to 1,939,137 shares with this purchase.
  • Chairman of the Board Gregory B. Maffei acquired 150,000 shares, paying $12.58 per share for a total amount of $1.89 million. Mr. Maffei increased his stake by 3.26% to 4,756,157 shares with this purchase.

Qurate retail is the new name for the QVC group, which was created when Liberty Interactive spun off its cable and non-retail holdings into a separate company called Liberty Ventures. Qurate retails consists of QVC, HSN, zulily, Ballard Designs, Frontgate, Garnet Hill and GrandinRoad.

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

P/E: 10.45 Forward P/E: 7.08 Industry P/E: 22.55
P/S: 0.42 Price/Book: 1.07 EV/EBITDA: 6.86
Market Cap: $5.8B Avg. Daily Volume: 3,919,617 52 Week Range: $11.17 – $25.03

5. Kinder Morgan, Inc. (KMI): $20.21

Executive Chairman Richard D. Kinder acquired 477,542 shares of this oil & gas pipelines company, paying $19.49 per share for a total amount of $9.31 million. Mr. Kinder increased his stake by 0.20% to 240,879,496 shares with this purchase.

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

P/E: 29.21 Forward P/E: 18.37 Industry P/E: 44.74
P/S: 3.23 Price/Book: 1.36 EV/EBITDA: 13.13
Market Cap: $45.75B Avg. Daily Volume: 14,533,646 52 Week Range: $14.62 – $20.55

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

Notable Insider Sales:

1. Shake Shack Inc. (SHAK): $59.77

Director Jonathan D. Sokoloff sold 522,870 shares of this restaurant chain for $60.51, generating $31.64 million from the sale. These shares were sold indirectly by Green Equity Investors VI, L.P.

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

P/E: 127.44 Forward P/E: 84.18 Industry P/E: 79.31
P/S: 4.51 Price/Book: 7.51 EV/EBITDA: 31.44
Market Cap: $2.22B Avg. Daily Volume: 766,477 52 Week Range: $40.67 – $70.12

2. Hostess Brands, Inc. (TWNK): $13.6

Director Dean C. Metropoulos sold 1,834,300 shares of this packaged foods company for $13.31, generating $24.41 million from the sale. These shares were sold indirectly by CDM HB Holdings, LLC.

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

P/E: 23.17 Forward P/E: 18.63 Industry P/E: 19.59
P/S: 2.05 Price/Book: 1.11 EV/EBITDA: 14.65
Market Cap: $1.77B Avg. Daily Volume: 1,075,304 52 Week Range: $9.865 – $14.7

3. Align Technology, Inc. (ALGN): $322.61

Shares of this dental products company were sold by 5 insiders:

  • SVP, Information Technology Sreelakshmi Kolli sold 19,495 shares for $324.29, generating $6.32 million from the sale.
  • CMO & Business Development Raphael Pascaud sold 15,000 shares for $326.18, generating $4.89 million from the sale.
  • SVP, Asia Pacific Julie Tay sold 13,500 shares for $322.41, generating $4.35 million from the sale.
  • Director Joseph Lacob sold 5,000 shares for $320.00, generating $1.6 million from the sale. These shares were sold indirectly through a trust. 1,042 of these shares were sold as a result of exercising options immediately prior to the sale.
  • SVP, Legal Affairs & GC Roger E. George sold 3,214 shares for $323.00, generating $1.04 million from the sale.

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

P/E: 69.5 Forward P/E: 45.12 Industry P/E: 32.61
P/S: 12.42 Price/Book: 20.55 EV/EBITDA: 46.3
Market Cap: $25.81B Avg. Daily Volume: 1,241,746 52 Week Range: $177.93 – $398.88

4. Carbon Black, Inc. (CBLK): $17.79

Shares of this software application company were sold by 4 insiders:

  • President & CEO Patrick Morley sold 277,830 shares for $19.00, generating $5.28 million from the sale.
  • Chief Strategy Officer Michael Viscuso sold 170,000 shares for $18.84, generating $3.2 million from the sale.
  • Senior Vice President and Chief Product Officer Ryan James Polk sold 128,000 shares for $19.00, generating $2.43 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Ronald H. Nordin sold 86,750 shares for $19.00, generating $1.65 million from the sale.

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

P/E: N/A Forward P/E: -38.67 Industry P/E: 40.94
P/S: 5.79 Price/Book: 7.21 EV/EBITDA: -16.33
Market Cap: $1.27B Avg. Daily Volume: 1,556,103 52 Week Range: $11.8 – $35

5. RealPage, Inc. (RP): $60.85

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

  • Chairman President & CEO Stephen T. Winn sold 200,000 shares for $59.41, generating $11.88 million from the sale. These shares were sold indirectly by Seren Capital, Ltd.
  • Director Alfred R. Berkeley III sold 3,000 shares for $59.87, generating $179,610 from the sale.

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

P/E: 162.7 Forward P/E: 29.68 Industry P/E: 33.72
P/S: 6.22 Price/Book: 5.18 EV/EBITDA: 41.46
Market Cap: $5.62B Avg. Daily Volume: 702,195 52 Week Range: $42.9 – $66.25

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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