Insider Weekends: Satya Nadella and the CFO of Microsoft Sell Stock

Welcome to edition 481 of Insider Weekends. Insider buying decreased last week with insiders purchasing $62.93 million of stock last week compared to $86.29 million in the week prior. Selling on the other hand increased with insiders selling $1.43 billion of stock last week compared to $819.65 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 went up to 22.78. In other words, insiders sold almost 23 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 9.49.

Insider Sector Heat Map September 6, 2019

Insider Sector Heat Map September 6, 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): $10.02

Shares of this cosmetics company were acquired by 4 insiders:

  • Director Peter Harf acquired 1,051,507 shares, paying $9.49 per share for a total amount of $9.98 million. These shares were purchased indirectly by HFS S.a.r.l.
  • Chief Executive Officer Pierre Laubies acquired 262,000 shares, paying $9.54 per share for a total amount of $2.49 million. Mr. Laubies increased his stake by 8.86% to 3,218,675 shares with this purchase.
  • Director Olivier Goudet acquired 50,000 shares, paying $9.53 per share for a total amount of $476,380. Mr. Goudet increased his stake by 69.77% to 121,666 shares with this purchase.
  • Director Robert S. Singer acquired 35,000 shares, paying $9.31 per share for a total amount of $325,962. Mr. Singer increased his stake by 14.84% to 270,812 shares with this purchase.

Mr. Harf also purchased nearly $60 million of Coty stock in mid-May of this year and an additional $16.4 million of Coty stock in late May. Following his mid-May purchase we wrote the following about his 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.

In addition to the enthusiastic insiders of Coty, Michael Burry (of The Big Short fame), had almost a third of his equity portfolio in Coty as of Q3 2016. He did not file a 13F filing listing his purchases for the next eight quarters. By the time he filed for Q4 2018 listing positions worth over $103 million, he no longer had a position in Coty.

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

P/E: N/A Forward P/E: 13.36 Industry P/E: N/A
P/S: 0.84 Price/Book: 1.65 EV/EBITDA: 11.55
Market Cap: $7.28B Avg. Daily Volume: 5,521,240 52 Week Range: $5.91 – $14.14

2. PVH Corp. (PVH): $85.39

Shares of this apparel company were acquired by 2 insiders:

  • Chairman & CEO Emanuel Chirico acquired 133,346 shares, paying $74.99 per share for a total amount of $10 million. Mr. Chirico increased his stake by 46.92% to 417,542 shares with this purchase.
  • Director Henry Nasella acquired 6,250 shares, paying $80.37 per share for a total amount of $502,293. These shares were purchased indirectly by a trust.

These purchases were preceded by a large drop in PVH stock over the last year after the company reported three straight quarters of negative or subpar revenue growth. The company also cut its full year revenue and earnings guidance after reporting better than expected Q2 2019 results. The insiders purchased stock close to multi-year lows and when the stock was trading around 8 times EBITDA.

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

P/E: 9.6 Forward P/E: 8.43 Industry P/E: N/A
P/S: 0.59 Price/Book: 1.09 EV/EBITDA: 8.53
Market Cap: $5.73B Avg. Daily Volume: 1,459,467 52 Week Range: $67.41 – $145.25

3. Prospect Capital Corporation (PSEC): $6.52

Chief Executive Officer John F. Barry acquired 579,166 shares of this business development company, paying $6.37 per share for a total amount of $3.69 million. Mr. Barry increased his stake by 1.47% to 39,906,051 shares with this purchase.

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

P/E: 16.72 Forward P/E: 7.58 Industry P/E: N/A
P/S: 3.34 Price/Book: 0.72 EV/EBITDA: N/A
Market Cap: $2.35B Avg. Daily Volume: 1,559,096 52 Week Range: $5.7 – $7.46

4. New Media Investment Group Inc. (NEWM): $8.97

Shares of this newspaper publishing company were acquired by 3 insiders:

  • Chief Executive Officer Michael Reed acquired 250,000 shares, paying $8.78 per share for a total amount of $2.19 million. Mr. Reed increased his stake by 66.25% to 627,361 shares with this purchase.
  • Director Laurence Tarica acquired 30,000 shares, paying $8.74 per share for a total amount of $262,200. Mr. Tarica increased his stake by 29.11% to 133,070 shares with this purchase.
  • Director Kevin M. Sheehan acquired 15,000 shares, paying $8.76 per share for a total amount of $131,400. Mr. Sheehan increased his stake by 45.36% to 48,070 shares with this purchase.

You can view the list of recent insider transactions for New Media Investment Group Inc. here.

P/E: 690 Forward P/E: 18.31 Industry P/E: N/A
P/S: 0.33 Price/Book: 0.81 EV/EBITDA: 7.18
Market Cap: $524.6M Avg. Daily Volume: 1,452,234 52 Week Range: $7.08 – $16.25

5. Elanco Animal Health Incorporated (ELAN): $27.35

Shares of this animal health company were acquired by 2 insiders:

  • President, CEO & Director Jeffrey N. Simmons acquired 75,750 shares, paying $26.55 per share for a total amount of $2.01 million. Mr. Simmons increased his stake by 19.21% to 470,006 shares with this purchase.
  •  Executive Vice President and Chief Financial Officer Todd S. Young acquired 10,000 shares, paying $26.57 per share for a total amount of $265,700. Mr. Young increased his stake by 52.96% to 28,883 shares with this purchase.

You can view the list of recent insider transactions for Elanco Animal Health Incorporated here.

P/E: 66.71 Forward P/E: 21.54 Industry P/E: N/A
P/S: 3.26 Price/Book: 1.9 EV/EBITDA: 16.81
Market Cap: $10.02B Avg. Daily Volume: 3,513,060 52 Week Range: $25.51 – $37.61

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $187.49

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 496,541 shares for $184.97, generating $91.85 million from the sale. These shares were sold indirectly by various entities.
  • Chief Revenue Officer David B. Fischer sold 12,267 shares for $184.12, generating $2.26 million from the sale.

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

P/E: 31.71 Forward P/E: 19.74 Industry P/E: N/A
P/S: 8.31 Price/Book: 6.03 EV/EBITDA: 18.48
Market Cap: $520.25B Avg. Daily Volume: 15,438,453 52 Week Range: $123.02 – $208.66

2. Zayo Group Holdings, Inc. (ZAYO): $33.82

CEO Daniel Caruso sold 2,250,000 shares of this bandwidth infrastructure solutions provider for $33.75, generating $75.94 million from the sale. 2,241859 of these shares were sold indirectly by DPC Papa Bear Enterprises, LLC.

Digital Colony Partners is currently in the process of acquiring Zayo for $35/share in cash in a deal worth $14.3 billion. The deal is expected to close in the first half of 2020. It is interesting that the CEO is selling now and willing to forego the 3.5% spread on the deal.

You can view the list of recent insider transactions for Zayo Group Holdings, Inc. here.

P/E: 54.55 Forward P/E: 45.7 Industry P/E: N/A
P/S: 3.09 Price/Book: 5.96 EV/EBITDA: 11.82
Market Cap: $7.97B Avg. Daily Volume: 2,474,179 52 Week Range: $20.27 – $35.68

3. Hess Corporation (HES): $64.04

Chief Executive Officer John B. Hess sold 924,364 shares of this integrated energy company for $65.34, generating $60.4 million from the sale. These shares were sold indirectly by a trust.

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

P/E: N/A Forward P/E: 58.22 Industry P/E: N/A
P/S: 2.91 Price/Book: 2.1 EV/EBITDA: 8.98
Market Cap: $18.89B Avg. Daily Volume: 2,872,053 52 Week Range: $35.59 – $74.81

4. Microsoft Corporation (MSFT): $139.1

Shares of Microsoft were sold by 5 insiders:

  • EVP, Chief Financial Officer Amy Hood sold 123,769 shares for $137.26, generating $16.99 million from the sale.
  • Chief Executive Officer Satya Nadella sold 99,837 shares for $137.20, generating $13.69 million from the sale.
  • EVP, Chief Marketing Officer Christopher C. Capossela sold 31,000 shares for $139.70, generating $4.33 million from the sale.
  • Executive Vice President Jean Philippe Courtois sold 11,779 shares for $140.00, generating $1.65 million from the sale.
  • Chief Accounting Officer Frank H. Brod sold 4,000 shares for $137.17, generating $548,680 from the sale.

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

P/E: 27.49 Forward P/E: 23.42 Industry P/E: N/A
P/S: 8.31 Price/Book: 10.39 EV/EBITDA: 18.6
Market Cap: $1.05T Avg. Daily Volume: 24,177,771 52 Week Range: $93.96 – $141.68

5. Amazon.com, Inc. (AMZN): $1833.51

Shares of Amazon.com were sold by 2 insiders:

  • Senior Vice President Jeffrey M. Blackburn sold 7,144 shares for $1791.40, generating $12.79 million from the sale.
  • CEO Worldwide Consumer Jeffrey A. Wilke sold 2,500 shares for $1792.10, generating $4.48 million from the sale. These shares were sold indirectly by a trust.

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

P/E: 76.07 Forward P/E: 55.21 Industry P/E: N/A
P/S: 3.47 Price/Book: 17.07 EV/EBITDA: 28.3
Market Cap: $875.21B Avg. Daily Volume: 3,385,246 52 Week Range: $1307 – $2035.8

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 Frank’s International (FI). 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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