Insider Weekends: Morris Goldfarb Starts Buying Shares of G-III Again

Welcome to edition 473 of Insider Weekends. Insider buying declined for the third week in a row with insiders purchasing $54.38 million of stock last week compared to $58.39 million in the week prior. Selling also decreased with insiders selling $613.73 million of stock last week compared to $704.94 million 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 11.29. In other words, insiders sold more than 11 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 12.07.

Insider Sector Heat Map July 12, 2019

Insider Sector Heat Map July 12, 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. Eidos Therapeutics, Inc. (EIDX): $39.97

Chief Executive Officer Neil Kumar acquired 882,353 shares of this biotech company, paying $29.90 per share for a total amount of $26.38 million. These shares were purchased indirectly by BridgeBio Pharma LLC. This could have been some sort of a private placement as Eidos did not trade this many shares on the date of this purchase and the market price was also much higher. There was nothing in the form 4 filing or the footnotes to indicate this was not an open market purchase.

We wrote the following about Eidos and Mr. Kumar last month,

This was an interesting purchase because Mr. Kumar serves as the CEO of both Eidos Therapeutics as well as BridgeBio Pharma. Mr. Kumar’s background is from Third Rock Ventures, McKinsey and MIT. When I looked into both companies some more, I noticed that they were very young companies that were founded within a couple of years of each other. BridgeBio raised over $474 million in capital from a large number of institutional investors including Sequoia, AIG and KKR.

Eidos Therapeutics priced its IPO in June 2018 at $17/share and raised a little over $106 million in the offering. The last year has been a wild ride for Eidos investors as the company first lost more than 60% of its value before more than tripling from the lows. As of March 31, 2019 BridgeBio owned 62.3% of Eidos and this latest purchase should put them over 65%. BridgeBio also purchased over $42 million worth of Eidos stock last December at much lower prices and it is interesting to see them buy more at much higher prices. Both these purchases don’t appear to be open market purchases and are probably private placements. You can check out all their insider purchases here.

BridgeBio has also filed to go public (Nasdaq: BBIO) and you can check out its S-1 filing here. From the filing, the company describes itself as follows,

We are a team of experienced drug discoverers, developers and innovators working to create life-altering medicines that target well-characterized genetic diseases at their source. We founded BridgeBio in 2015 to identify and advance transformative medicines to treat patients who suffer from Mendelian diseases, which are diseases that arise from defects in a single gene, and cancers with clear genetic drivers. Our pipeline of over 15 development programs includes product candidates ranging from early discovery to late-stage development. Several of our programs target indications that we believe present the potential for our product candidates, if approved, to target portions of market opportunities of at least $1.0 billion in annual sales. We have four product candidates in clinical trials that, if positive, we believe could support the filing of an application for marketing authorization. Two of these product candidates are in Phase 3 clinical trials, one is in a Phase 2/3 clinical trial, and one is in a Phase 2 clinical trial.

Birgir Magnusson has done a very good job of providing an overview of the company and its planned IPO on Seeking Alpha here.

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

P/E: N/A Forward P/E: -18.94 Industry P/E: 97.74
P/S: N/A Price/Book: 10.2 EV/EBITDA: -31.22
Market Cap: $1.47B Avg. Daily Volume: 163,701 52 Week Range: $8.89 – $40.52

2. Hyster-Yale Materials Handling, Inc. (HY): $54.49

Chairman Alfred M. Rankin acquired 25,696 shares of this truck manufacturing company, paying $53.77 per share for a total amount of $1.38 million. These shares were purchased indirectly by various trusts and entities.

You can view the list of recent insider transactions for Hyster-Yale Materials Handling, Inc. here.

P/E: 39.2 Forward P/E: 9.2 Industry P/E: 28.9
P/S: 0.28 Price/Book: 1.75 EV/EBITDA: 18.67
Market Cap: $907.6M Avg. Daily Volume: 80,974 52 Week Range: $43.26 – $76.79

3. G-III Apparel Group, Ltd. (GIII): $28.4

CEO Morris Goldfarb acquired 40,000 shares of this apparel company, paying $26.47 per share for a total amount of $1.06 million. Mr. Goldfarb increased his stake by 1.25% to 3,250,483 shares with this purchase.

This purchase reminded me of another purchase of G-III by Mr. Goldfarb in April 2017, which was the first insider purchase at the company in nearly four years. We wrote the following about G-III then,

G-III markets products under its proprietary brands like G.H. Bass, DKNY, Andrew Marc, etc. and also licenses its products under Calvin Klein, Tommy Hilfiger, Guess?, Kenneth Cole NY, Cole Haan, Levi’s and several other brands. The stock has seen a sharp decline over the last two years, dropping from a split-adjusted high of over $72 in July 2015 to a low of $19.11 last month. Mr. Goldfarb was a consistent seller of the stock in 2013, 2014 and 2015 at prices as high as $70.77 as you can see here.

The stock appears to be cheaper than peers like V.F. Corporation (VFC) on metrics such as Price/Sales and EV/EBITDA but it also does not enjoy the kind of margins V.F. does with its brands like The North Face, Timberland and Nautica, amongst many others. G-III also does not pay a dividend, which could provide some returns to investors while they wait for the dust to settle in the storm apparel and retail companies find themselves in.

The stock went on to more than double over a 14 month period after Mr. Goldfarb’s purchase and peaked just over $49 before starting yet another steep decline. Even though the stock is trading higher than it was when the CEO made his April 2017 purchase, it is actually slightly cheaper on a P/S and EV/EBITDA basis because both revenue and earnings have continued to grow over the last two years.

You can view the list of recent insider transactions for G-III Apparel Group, Ltd. here.

P/E: 10.17 Forward P/E: 8 Industry P/E: 116.75
P/S: 0.45 Price/Book: 1.17 EV/EBITDA: 7.5
Market Cap: $1.39B Avg. Daily Volume: 821,438 52 Week Range: $23.34 – $50.83

4. Cornerstone Building Brands, Inc. (CNR): $6.17

EVP, CFO Jeffrey S. Lee acquired 80,000 shares of this metal fabrication company, paying $5.85 per share for a total amount of $468,061. Mr. Lee increased his stake by 64.40% to 204,224 shares with this purchase.

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

P/E: N/A Forward P/E: 4.28 Industry P/E: 16.04
P/S: 0.23 Price/Book: 0.85 EV/EBITDA: 32.45
Market Cap: $774.42M Avg. Daily Volume: 834,670 52 Week Range: $4.2 – $20.9

5. OPKO Health, Inc. (OPK): $2.16

CEO & Chairman Phillip Frost M.D. acquired 100,000 shares of this devices and drug development company, paying $2.23 per share for a total amount of $222,831. These shares were purchased indirectly by Frost Nevada Investments Trust,.

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

P/E: N/A Forward P/E: -14.4 Industry P/E: 29.57
P/S: 1.39 Price/Book: 0.75 EV/EBITDA: -15.67
Market Cap: $1.33B Avg. Daily Volume: 4,809,877 52 Week Range: $1.73 – $6.4

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

Notable Insider Sales:

1. Workday, Inc. (WDAY): $222.17

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

  • Director David A. Duffield sold 233,914 shares for $213.79, generating $50.01 million from the sale.
  • SVP, General Counsel & Secty James P. Shaughnessy sold 1,500 shares for $219.32, generating $328,980 from the sale.

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

P/E: N/A Forward P/E: 98.74 Industry P/E: 32.47
P/S: 16.58 Price/Book: 24.45 EV/EBITDA: -186.55
Market Cap: $50.21B Avg. Daily Volume: 1,702,320 52 Week Range: $117.72 – $226.83

2. Garmin Ltd. (GRMN): $79.79

Executive Chairman Min H. Kao sold 465,847 shares of this GPS manufacturer for $79.16, generating $36.88 million from the sale. These shares were sold indirectly by Mr. Kao’s children.

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

P/E: 21.45 Forward P/E: 20.56 Industry P/E: 33.29
P/S: 4.45 Price/Book: 3.51 EV/EBITDA: 15.52
Market Cap: $15.15B Avg. Daily Volume: 1,063,482 52 Week Range: $59.98 – $89.72

3. DocuSign, Inc. (DOCU): $53.2

Director Peter Solvik sold 541,532 shares of this software application company for $51.52, generating $27.9 million from the sale. These shares were sold indirectly by various trusts.

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

P/E: N/A Forward P/E: 140 Industry P/E: 32.47
P/S: 12.18 Price/Book: 15.46 EV/EBITDA: -56.71
Market Cap: $9.25B Avg. Daily Volume: 2,491,809 52 Week Range: $35.06 – $68.35

4. Inseego Corp. (INSG): $5.15

Director Brian Miller sold 3,900,000 shares of this communication equipment company for $4.80, generating $18.72 million from the sale. These shares were sold indirectly by North Sound Trading, LP.

You can view the list of recent insider transactions for Inseego Corp. here.

P/E: N/A Forward P/E: 19.81 Industry P/E: 21.19
P/S: 1.98 Price/Book: N/A EV/EBITDA: 50.15
Market Cap: $405.48M Avg. Daily Volume: 1,034,725 52 Week Range: $1.73 – $6

5. Amazon.com, Inc. (AMZN): $2011

Shares of Amazon were sold by 2 insiders:

  • CEO Amazon Web Services Andrew R. Jassy sold 7,308 shares for $2000.00, generating $14.62 million from the sale.
  • Senior Vice President David Zapolsky sold 763 shares for $2000.00, generating $1.53 million from the sale.

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

P/E: 83.95 Forward P/E: 52.58 Industry P/E: 25.89
P/S: 4.1 Price/Book: 20.44 EV/EBITDA: 32.36
Market Cap: $990.08B Avg. Daily Volume: 4,004,420 52 Week Range: $1307 – $2050.5

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 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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria

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