Welcome to edition 482 of Insider Weekends. Insider buying more than doubled last week with insiders purchasing $133.82 million of stock last week compared to $62.93 million in the week prior. Selling on the other hand decreased with insiders selling $1.24 billion of stock last week compared to $1.43 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 9.25. In other words, insiders sold more than 9 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 22.78.
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. Medallia, Inc. (MDLA): $30.08
Director Douglas M. Leone acquired 399,265 shares of this software application company, paying $28.12 per share for a total amount of $11.23 million.
Doug Leone is a billionaire venture capitalist who has been with the premier VC firm Sequoia Capital for the last 31 years after stints at Sun Microsystems and HP. He made these purchases in his direct account and also owns several million additional shares indirectly via Sequoia and other entities. These purchases were filed with the SEC after hours on Thursday last week and investors bid the stock up more than 14% on Friday.
Medallia went public on July 19th of this year at $21/share, opened its first day of trading at $34 and hit an intraday high of $39.56 before closing the day at $37.05. The company reported fiscal Q2 2020 results in the first week of September and the stock dropped significantly over the next two trading sessions.
Once you decode Medallia’s jargon filled product platform page that is filled with phrases like “neural network-based predictive models” and “fine grain data permissions”, you begin to understand that Medallia is a brand and identity management company. Unfortunately the company’s product pages appears to be written by geeks for geeks. I say this coming from a data analysis background having run an artificial intelligence project to analyze SEC filings.
The post-earnings reaction to Medallia is a little surprising as the company posted a smaller than expected non-GAAP loss of 6 cents per share compared to estimates of a loss of 15 cents per share. GAAP loss for Q2 was $38.45 million on revenue of $95.67 million, which grew 27% year-over-year. Most of the GAAP loss can be attributed to $35.18 million in stock-based compensation expense as is common with technology companies.
Revenue growth is accelerating as you can see from the chart on the right and the company claims it has less than 1% market penetration in a $68 billion market. Medallia generated positive cash flow from operation in two out of the last three quarters. Their balance sheet from the latest 10Q filing indicates the company has 126.92 million shares outstanding but their statement of operations indicates that the weighted shares outstanding they used to calculate per share loss is 43.99 million shares. Using the former, the company is trading for 11.4 times trailing twelve months revenue or 3.95 times sales using the latter. The difference between the former and latter is probably explained by the following line from their amended S-1 filing,
“As of April 30, 2019, we had outstanding options to purchase an aggregate of 50,976,927 shares of our common stock, with a weighted-average exercise price of $5.36, pursuant to our equity compensation plans”
Overall the company looks interesting and worth exploring further. If the recent investment style shift from growth to value continues, some of these cloud technology companies could get cheaper and provide an attractive point of entry.
You can view the list of recent insider transactions for Medallia, Inc. here.
|P/E: N/A||Forward P/E: -1504||Industry P/E: N/A|
|P/S: 10.34||Price/Book: 3.33||EV/EBITDA: -18.62|
|Market Cap: $3.69B||Avg. Daily Volume: 1,472,827||52 Week Range: $26.18 – $44.72|
2. Cigna Corporation (CI): $160.85
President & CEO David Cordani acquired 32,509 shares of this health insurance company, paying $155.17 per share for a total amount of $5.04 million. Mr. Cordani increased his stake by 10.05% to 355,914 shares with this purchase.
You can view the list of recent insider transactions for Cigna Corporation here.
|P/E: 13.88||Forward P/E: 8.59||Industry P/E: N/A|
|P/S: 0.59||Price/Book: 1.39||EV/EBITDA: 10.73|
|Market Cap: $60.74B||Avg. Daily Volume: 2,036,950||52 Week Range: $141.95 – $226.61|
3. Gladstone Land Corporation (LAND): $11.98
CEO David Gladstone acquired 210,000 shares of this farmland and farm-related properties REIT, paying $11.87 per share for a total amount of $2.49 million. Mr. Gladstone increased his stake by 10.05% to 2,298,585 shares with this purchase.
You can view the list of recent insider transactions for Gladstone Land Corporation here.
|P/E: 67.3||Forward P/E: -54.45||Industry P/E: N/A|
|P/S: 7.73||Price/Book: 1.06||EV/EBITDA: 24.52|
|Market Cap: $249.3M||Avg. Daily Volume: 155,995||52 Week Range: $11.12 – $13.85|
4. RBB Bancorp (RBB): $20.14
Director Peter M. Chang acquired 115,000 shares of this regional bank, paying $20.00 per share for a total amount of $2.3 million. Mr. Chang increased his stake by 28.00% to 525,717 shares with this purchase.
You can view the list of recent insider transactions for RBB Bancorp here.
|P/E: 10.3||Forward P/E: 10.33||Industry P/E: N/A|
|P/S: 3.78||Price/Book: 1.03||EV/EBITDA: N/A|
|Market Cap: $405.02M||Avg. Daily Volume: 42,721||52 Week Range: $17.03 – $30.28|
5. At Home Group Inc. (HOME): $9.21
Shares of this home decor superstores chain were acquired by 5 insiders:
- Chairman, CEO and President Lewis L. Bird acquired 64,005 shares, paying $7.81 per share for a total amount of $500,193. These shares were purchased indirectly through a trust.
- Director Philip L. Francis acquired 21,125 shares, paying $7.84 per share for a total amount of $165,603. These shares were purchased indirectly through a trust.
- Chief Financial Officer Jeffrey R. Knudson acquired 10,000 shares, paying $7.89 per share for a total amount of $78,900. Mr. Knudson increased his stake by 48.08% to 30,798 shares with this purchase.
- President and COO Peter S. G. Corsa acquired 6,393 shares, paying $7.86 per share for a total amount of $50,218. These shares were purchased indirectly through a trust.
- Chief Development Officer Norman E. McLeod acquired 4,000 shares, paying $7.99 per share for a total amount of $31,956. Mr. McLeod increased his stake by 41.36% to 13,672 shares with this purchase.
You can view the list of recent insider transactions for At Home Group Inc. here.
|P/E: 9.38||Forward P/E: 11.66||Industry P/E: N/A|
|P/S: 0.46||Price/Book: 0.7||EV/EBITDA: 14.77|
|Market Cap: $590.16M||Avg. Daily Volume: 3,710,776||52 Week Range: $4.58 – $33.975|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Facebook, Inc. (FB): $187.19
Shares of Facebook were sold by 2 insiders:
- COB and CEO Mark Zuckerberg sold 628,000 shares for $188.00, generating $118.06 million from the sale. These shares were sold indirectly through various entities.
- Chief Operating Officer Sheryl Sandberg sold 55,000 shares for $187.58, generating $10.32 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Facebook, Inc. here.
|P/E: 31.66||Forward P/E: 19.7||Industry P/E: N/A|
|P/S: 8.53||Price/Book: 6.02||EV/EBITDA: 18.45|
|Market Cap: $534.04B||Avg. Daily Volume: 15,247,198||52 Week Range: $123.02 – $208.66|
2. Intuit Inc. (INTU): $265.22
Chairman of Exec Committee Scott D. Cook sold 133,333 shares of this software application company for $278.53, generating $37.14 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Intuit Inc. here.
|P/E: 45.03||Forward P/E: 31.13||Industry P/E: N/A|
|P/S: 10.17||Price/Book: 18.41||EV/EBITDA: 32.5|
|Market Cap: $68.98B||Avg. Daily Volume: 1,277,703||52 Week Range: $182.61 – $295.77|
3. Zayo Group Holdings, Inc. (ZAYO): $33.8
CEO Daniel Caruso sold 1,000,000 shares of this bandwidth infrastructure solutions provider for $33.78, generating $33.78 million from the sale. These shares were sold indirectly by DPC Papa Bear Enterprises, LLC.
You can view the list of recent insider transactions for Zayo Group Holdings, Inc. here.
|P/E: 54.52||Forward P/E: 45.68||Industry P/E: N/A|
|P/S: 3.1||Price/Book: 5.95||EV/EBITDA: 11.81|
|Market Cap: $7.99B||Avg. Daily Volume: 2,750,885||52 Week Range: $20.27 – $35.68|
4. Workday, Inc. (WDAY): $167.59
Director David A. Duffield sold 175,000 shares of this software application company for $171.71, generating $30,048,720 from the sale. These shares were sold indirectly by Dave & Cheryl Duffield Foundation.
You can view the list of recent insider transactions for Workday, Inc. here.
|P/E: N/A||Forward P/E: 75.49||Industry P/E: N/A|
|P/S: 11.78||Price/Book: 17.29||EV/EBITDA: -136.17|
|Market Cap: $38.21B||Avg. Daily Volume: 1,755,889||52 Week Range: $117.72 – $226.83|
5. Antero Midstream Corporation (AM): $7.21
Director Howard W. Keenan Jr. sold 2,855,848 shares of this oil & gas midstream company for $6.81, generating $19.45 million from the sale. These shares were sold indirectly by Yorktown Energy Partners V, L.P.
You can view the list of recent insider transactions for Antero Midstream Corporation here.
|P/E: 17.98||Forward P/E: 7.51||Industry P/E: N/A|
|P/S: 7.89||Price/Book: 0.92||EV/EBITDA: N/A|
|Market Cap: $3.65B||Avg. Daily Volume: 6,568,032||52 Week Range: $6.545 – $18.82|
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.