Insider Weekends: The Fertittas Add To Their Red Rock Resorts Stake

Welcome to edition 480 of Insider Weekends. Insider buying increased last week with insiders purchasing $86.29 million of stock last week compared to $67.39 million in the week prior. Selling on the other hand decreased with insiders selling $819.65 million of stock last week compared to $1.65 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 9.49. 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 24.42.

Insider Sector Heat Map August 30, 2019

Insider Sector Heat Map August 30, 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. Red Rock Resorts, Inc. (RRR): $20.85

Director Lorenzo J. Fertitta acquired 555,148 shares of this resorts & casinos company, paying $19.30 per share for a total amount of $10.71 million. These shares were purchased indirectly through various trusts.

This is the third week in a row purchases by the Fertitta brothers, Frank and Lorenzo, made our top 5 list. With this latest purchase they have bumped up their stake in the company to over 47.12 million shares representing 67% of total shares outstanding.

Red Rock Resorts (Station Casinos in a former life) went public in April 2016 at a price of $19.50. The Fertittas started buying stock this August after the stock dipped below $19. Despite a recent bounce back from levels the stock had not seen since its IPO, the stock is still down 36% over the last year thanks to a string of earnings misses during the last four quarters.

You can view the list of recent insider transactions for Red Rock Resorts, Inc. here.

P/E: 51.35 Forward P/E: 13.28 Industry P/E: 60.57
P/S: 1.38 Price/Book: 2.79 EV/EBITDA: 9.54
Market Cap: $2.44B Avg. Daily Volume: 779,192 52 Week Range: $16.76 – $32.81

2. Fox Corporation (FOX): $32.8

Chairman Keith Rupert Murdoch acquired 500,000 shares of this broadcasting company, paying $32.06 per share for a total amount of $16.03 million. Mr. Murdoch increased his stake by 70.85% to 1,205,714 shares with this purchase.

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

P/E: 12.77 Forward P/E: 13.96 Industry P/E: 13.32
P/S: 1.75 Price/Book: 2.05 EV/EBITDA: 8.98
Market Cap: $19.88B Avg. Daily Volume: 1,764,701 52 Week Range: $31.28 – $41.73

3. Kinder Morgan, Inc. (KMI): $20.27

Shares of this oil & gas pipelines company were acquired by 2 insiders:

  • Executive Chairman Richard D. Kinder acquired 700,000 shares, paying $19.87 per share for a total amount of $13.91 million. Mr. Kinder increased his stake by 0.29% to 241,879,496 shares with this purchase.
  • Director Deborah MacDonald acquired 5,000 shares, paying $19.91 per share for a total amount of $99,550. Ms. MacDonald increased her stake by 19.74% to 30,328 shares with this purchase.

Mr. Kinder has been active buyer of Kinder Morgan shares this year as you can see here. We wrote the following after one of his purchases in February,

We reported on $3.87 million of purchases by Mr. Kinder in the week prior and he more than tripled his buying last week. With the stock rebounding strongly off the Christmas Eve lows and trading close to a 52 week high, it is interesting to see Mr. Kinder continue to purchase shares.

Kinder Morgan was one of the first companies in the energy industry to favor the Master Limited Partnership (MLP) structure that allowed companies to pay no corporate taxes and pass all its profits to investors as distributions. More than four years ago, it was also one of the first to abandon the structure by merging its four pipeline companies into a single one and adopting a traditional C corporate structure. With changes in the tax structure in 2018 pushing the corporate tax rate well below the top individual tax rate, the MLP structure was no longer as tax efficient as it once was and we have seen a number of MLP companies converting to C corporations in 2018.

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

P/E: 20.31 Forward P/E: 18.77 Industry P/E: 44.74
P/S: 3.27 Price/Book: 1.36 EV/EBITDA: 13.18
Market Cap: $45.57B Avg. Daily Volume: 13,486,946 52 Week Range: $14.62 – $21.5

4. DISH Network Corporation (DISH): $33.56

Executive Vice President James DeFranco acquired 300,000 shares of DISH Network, paying $31.18 per share for a total amount of $9.35 million. These shares were purchased indirectly by a limited partnership.

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

P/E: 12.34 Forward P/E: 17.12 Industry P/E: 13.32
P/S: 1.19 Price/Book: 1.69 EV/EBITDA: 11.34
Market Cap: $15.64B Avg. Daily Volume: 2,934,636 52 Week Range: $23.22 – $44.66

5. Wayfair Inc. (W): $112.74

Director Michael Andrew Kumin acquired 29,000 shares of this e-commerce company, paying $109.75 per share for a total amount of $3.18 million. Mr. Kumin increased his stake by 17.45% to 195,228 shares with this purchase. 8,000 of these shares were purchased indirectly by TOF Capital.

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

P/E: N/A Forward P/E: -19.68 Industry P/E: 24.52
P/S: 1.3 Price/Book: N/A EV/EBITDA: -20.9
Market Cap: $10.38B Avg. Daily Volume: 1,727,072 52 Week Range: $76.6 – $173.718

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $185.67

Shares of Facebook were sold by 4 insiders:

  • COB and CEO Mark Zuckerberg sold 592,500 shares for $180.78, generating $107.11 million from the sale. These shares were sold indirectly by various entities.
  • Chief Operating Officer Sheryl Sandberg sold 55,000 shares for $182.41, generating $10.03 million from the sale. These shares were sold indirectly through a trust.
  • Director Peter Thiel sold 22,246 shares for $182.00, generating $4.05 million from the sale. These shares were sold indirectly by various funds.
  • Chief Financial Officer David M. Wehner sold 11,036 shares for $183.44, generating $2.02 million from the sale.

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

P/E: 31.4 Forward P/E: 19.54 Industry P/E: 40.18
P/S: 8.29 Price/Book: 5.97 EV/EBITDA: 18.28
Market Cap: $518.83B Avg. Daily Volume: 16,729,423 52 Week Range: $123.02 – $208.66

2. Restaurant Brands International Inc. (QSR): $78.45

Shares of this operator of Tim Hortons, Burger King and Popeyes were sold by 5 insiders:

  • Director Paul J. Fribourg sold 488,024 shares for $77.20, generating $37.68 million from the sale. These shares were sold indirectly by various entities.
  • COO Joshua Kobza sold 203,198 shares for $76.71, generating $15.59 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Executive Officer Jose E. Cil sold 122,680 shares for $77.74, generating $9.54 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • VP, Controller and Principal Accounting Officer Jacqueline Friesner sold 26,392 shares for $77.30, generating $2.04 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Ali Hedayat sold 15,000 shares for $77.81, generating $1.17 million from the sale.

You can view the list of recent insider transactions for Restaurant Brands International Inc. here.

P/E: 34.98 Forward P/E: N/A Industry P/E: 59.08
P/S: 3.66 Price/Book: 10.8 EV/EBITDA: 16.21
Market Cap: $19.86B Avg. Daily Volume: 1,882,678 52 Week Range: $50.2 – $79.46

3. Tandem Diabetes Care, Inc. (TNDM): $72.43

Shares of this medical devices company were sold by 3 insiders:

  • Director Douglas A. Roeder sold 308,297 shares for $70.32, generating $21.68 million from the sale. These shares were sold indirectly by Delphi Management Partners VIII, L.L.C.
  • Executive Chairman Kim D. Blickenstaff sold 100,000 shares for $70.96, generating $7.09 million from the sale. These shares were sold indirectly by various trusts.
  • EVP & Chief Commercial Officer Brian B. Hansen sold 6,969 shares for $70.00, generating $487,830 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Tandem Diabetes Care, Inc. here.

P/E: N/A Forward P/E: -1207.17 Industry P/E: 31.61
P/S: 14.51 Price/Book: 29.19 EV/EBITDA: -186.93
Market Cap: $4.09B Avg. Daily Volume: 1,418,603 52 Week Range: $26.4 – $74.81

4. Fair Isaac Corporation (FICO): $352.72

Shares of this software and data management company were sold by 3 insiders:

  • Executive Vice President Richard Deal sold 18,057 shares for $350.79, generating $6.33 million from the sale.
  • EVP, General Counsel & Secretaru Mark R. Scadina sold 15,000 shares for $353.93, generating $5.31 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Executive Vice President Wayne Elliot Huyard sold 10,000 shares for $347.54, generating $3.48 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 57.54 Forward P/E: 41.06 Industry P/E: 283.27
P/S: 8.72 Price/Book: 38.03 EV/EBITDA: 37.65
Market Cap: $9.97B Avg. Daily Volume: 233,526 52 Week Range: $170.26 – $371.81

5. Frank’s International N.V. (FI): $4.35

Director Steven B. Mosing sold 2,444,407 shares of this oil & gas equipment & services company for $4.43, generating $10.83 million from the sale. 1,267,746 of these shares were sold indirectly by the Steven Brent Mosing Family, L.L.C.

You can view the list of recent insider transactions for Frank’s International N.V. here.

P/E: N/A Forward P/E: -145 Industry P/E: 134.45
P/S: 1.71 Price/Book: 0.98 EV/EBITDA: 25.22
Market Cap: $984.71M Avg. Daily Volume: 859,581 52 Week Range: $3.98 – $9.12

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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