Welcome to edition 468 of Insider Weekends. Insider buying edged up a little last week with insiders purchasing $218.22 million of stock compared to $214.72 million in the week prior. Selling on the other hand decreased with insiders selling $1.02 billion of stock last week compared to $1.25 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 4.69. In other words, insiders sold almost 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 5.82.
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. Capri Holdings Limited (CPRI): $34.21
Shares of the company formerly known as Michael Kors were acquired by 2 insiders:
Michael Kors acquired the luxury footwear company Jimmy Choo for $1.2 billion in 2017 and then the following year acquired Versace for $2.12 billion. After the acquisition of Versace, Michael Kors renamed the holding company Capri Holdings, while continuing to retain all three brands. The move was reminiscent of Coach’s decision to rename itself Tapestry after it acquired high-end shoe brand Stuart Weitzman in 2015 and Kate Spade in 2017.
As you can see from the chart below, the last year has not been kind to either company with Tapestry losing more than a third of its value and Capri losing nearly half its value.
When Capri reported fiscal fourth quarter 2019 results ended March 30, 2019, it provided a breakdown of revenue for all three brands with Versace growing revenue in the high single digits, Jimmy Choo reporting a 35% increase in revenue (constant currency basis) and Michael Kors increased it revenue by 1.8% (a decline of 0.4% after currency impacts were factored in). The company plans to more than double Versace’s revenue to $2 billion per year and increase Jimmy Choo’s revenue by over 60% to $1 billion a year.
While a return to high revenue growth could be welcomed by investors, there is a possibility the company might do so by diluting the brands as it did with Michael Kors. In a quest for growth, the company flooded the market with lower priced or highly discounted items that eventually hurt the brand’s image.
Coach did not make the same mistake but is struggling with anemic revenue growth. Coach saw revenue increase 1% last quarter, Kate Spade posted a 5% gain in revenue and Stuart Weitzman managed a 4% gain on a constant currency basis. Tapestry also announced a $1 billion share buyback program.
Net margins at both companies are comparable with Capri managing 10.37% net margins and Tapestry 11.78% net margins. Tapestry’s balance sheet is not leveraged despite its acquisitions and the company trades for 8 times EBITDA while sporting a 4.46% dividend yield (53% payout ratio). Capri carries over $2.3 billion in net debt on its balance sheet and trades for less than 7 times EBITDA. It does not pay a dividend.
If the trade wars show signs of simmering down, it would be worth exploring both these companies further, especially in light of these insider purchases.
You can view the list of recent insider transactions for Capri Holdings Limited here.
P/E: 9.56 | Forward P/E: 6.9 | Industry P/E: 34.76 |
P/S: 0.99 | Price/Book: 2.13 | EV/EBITDA: 6.81 |
Market Cap: $5.16B | Avg. Daily Volume: 2,777,709 | 52 Week Range: $32.09 – $75.96 |
2. RE/MAX Holdings, Inc. (RMAX): $32.15
Director David L. Liniger acquired 122,911 shares of this real estate services company, paying $30.33 per share for a total amount of $3.73 million.
You can view the list of recent insider transactions for RE/MAX Holdings, Inc. here.
P/E: 21.58 | Forward P/E: 13.68 | Industry P/E: 19.71 |
P/S: 4.22 | Price/Book: 1.18 | EV/EBITDA: 4.11 |
Market Cap: $976.32M | Avg. Daily Volume: 167,698 | 52 Week Range: $27.84 – $56.77 |
3. Revlon, Inc. (REV): $23.33
Director Ronald O. Perelman acquired 190,000 shares of this beauty care products company, paying $21.86 per share for a total amount of $4.15 million. These shares were purchased indirectly by MacAndrews & Forbes Incorporated.
You can view the list of recent insider transactions for Revlon, Inc. here.
P/E: N/A | Forward P/E: -9.64 | Industry P/E: 76.37 |
P/S: 0.47 | Price/Book: N/A | EV/EBITDA: 32.85 |
Market Cap: $1.2B | Avg. Daily Volume: 160,003 | 52 Week Range: $14 – $29.62 |
4. American Airlines Group Inc. (AAL): $30.92
Shares of this airline were acquired by 7 insiders:
You can view the list of recent insider transactions for American Airlines Group Inc. here.
P/E: 9.92 | Forward P/E: 5.37 | Industry P/E: 41.33 |
P/S: 0.31 | Price/Book: N/A | EV/EBITDA: 7.36 |
Market Cap: $13.75B | Avg. Daily Volume: 6,474,801 | 52 Week Range: $27.02 – $44.93 |
5. Mellanox Technologies, Ltd. (MLNX): $111.65
Director Steve Sanghi acquired 20,000 shares of this semiconductor company, paying $110.54 per share for a total amount of $2.21 million. Mr. Sanghi increased his stake by 336.13% to 25,950 shares with this purchase.
This purchase is interesting in light of the fact that Nvidia (NVDA) is in the process of acquiring Mellanox Technologies in an all cash deal valued at $125/share. The big discount to the deal price is partially on account of concerns China might hold up the deal like it did with Qualcomm’s acquisition of NXP Semiconductors (NXPI).
You can view the list of recent insider transactions for Mellanox Technologies, Ltd. here.
P/E: 42.53 | Forward P/E: 15.79 | Industry P/E: 7.95 |
P/S: 5.35 | Price/Book: 4.36 | EV/EBITDA: 21.15 |
Market Cap: $6.12B | Avg. Daily Volume: 1,462,263 | 52 Week Range: $65.68 – $121.13 |
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Walmart Inc. (WMT): $106.06
Shares of Walmart were sold by 2 insiders:
You can view the list of recent insider transactions for Walmart Inc. here.
P/E: 37.11 | Forward P/E: 21.21 | Industry P/E: 37.06 |
P/S: 0.59 | Price/Book: 4.46 | EV/EBITDA: 11.56 |
Market Cap: $304.09B | Avg. Daily Volume: 6,368,795 | 52 Week Range: $82.37 – $106.36 |
2. STERIS plc (STE): $138.02
Shares of this healthcare products company were sold by 5 insiders:
You can view the list of recent insider transactions for STERIS plc here.
P/E: 38.77 | Forward P/E: 23.43 | Industry P/E: 32.13 |
P/S: 4.2 | Price/Book: 3.66 | EV/EBITDA: 23.34 |
Market Cap: $11.67B | Avg. Daily Volume: 527,595 | 52 Week Range: $99.14 – $138.87 |
3. Zayo Group Holdings, Inc. (ZAYO): $32.68
Shares of this bandwidth infrastructure solutions provider were sold by 2 insiders:
You can view the list of recent insider transactions for Zayo Group Holdings, Inc. here.
P/E: 61.54 | Forward P/E: 41.37 | Industry P/E: 21.33 |
P/S: 2.98 | Price/Book: 6.17 | EV/EBITDA: 11.53 |
Market Cap: $7.7B | Avg. Daily Volume: 6,212,541 | 52 Week Range: $20.27 – $39.66 |
4. Snap Inc. (SNAP): $13.87
Shares of this social media company were sold by 4 insiders:
You can view the list of recent insider transactions for Snap Inc. here.
P/E: N/A | Forward P/E: -115.58 | Industry P/E: 32.58 |
P/S: 14.63 | Price/Book: 8.55 | EV/EBITDA: -16.63 |
Market Cap: $18.59B | Avg. Daily Volume: 27,100,319 | 52 Week Range: $4.82 – $14.47 |
5. Bruker Corporation (BRKR): $43.87
CEO, President Frank H. Laukien sold 400,000 shares of this scientific instruments company for $41.48, generating $16.59 million from the sale. These shares were sold indirectly by Mr. Laukien’s former spouse.
You can view the list of recent insider transactions for Bruker Corporation here.
P/E: 37.53 | Forward P/E: 24.51 | Industry P/E: 191.27 |
P/S: 3.57 | Price/Book: 7.53 | EV/EBITDA: 20.24 |
Market Cap: $6.88B | Avg. Daily Volume: 800,809 | 52 Week Range: $26.1 – $44.47 |
You can view the full list of sales from this Insider Sales page.
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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