Insider Weekends: Cluster Purchase By The Insiders Of Children’s Place

Welcome to edition 496 of Insider Weekends. Insider buying increased with insiders purchasing $70.81 million of stock last week compared to $60.21 million in the week prior. Selling on the other hand decreased with insiders selling $1.88 billion of stock last week compared to $2.18 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 26.52. In other words, insiders sold almost 27 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 36.25.

Insider Sector Heat Map December 20, 2019

Insider Sector Heat Map December 20, 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. Enterprise Products Partners L.P. (EPD): $28.13

Chairman of the Board Randa Duncan Williams acquired 502,796 units of this oil & gas midstream company, paying $27.69 per share for a total amount of $13.93 million. These shares were purchased indirectly through a trust.

This is the third week in a row Ms. Williams has purchased units of Enterprise Products Partners. Her purchases this month have totaled $49.44 million. While these purchases are large, they represent less than 1% of Ms. William’s estimated net worth of $6.6 billion. She is one of the four children of Dan Duncan who co-founded Enterprise Product Partners in 1968 with $10,000 and two fuel trucks.

She joined Enterprise Products in 1994 after practicing law for six years and previously served as President and CEO of the company. She has been the non-executive Chairman of the Board since 2013. I wrote the following in a premium blog post a couple of weeks ago,

Over the last several weeks we have seen very consistent insider buying by insiders of midstream energy companies. Most of these purchases have been by insiders that have been with their companies for decades or were founders of those companies. What is remarkable is not just the size of the purchases but also the frequency of these purchases.

You can view the list of recent insider transactions for Enterprise Products Partners L.P. here.

P/E: 12.95 Forward P/E: 12.67 Industry P/E: 14.12
P/S: 1.81 Price/Book: 2.51 EV/EBITDA: 11.6
Market Cap: $61.58B Avg. Daily Volume: 5,160,798 52 Week Range: $23.33 – $30.87

2. The Children’s Place, Inc. (PLCE): $63.08

Shares of this apparel retail company were acquired by 4 insiders:

  • President and CEO Jane T. Elfers acquired 18,100 shares, paying $55.54 per share for a total amount of $1 million. Ms. Elfers increased her stake by 7.12% to 272,488 shares with this purchase.
  • Director Norman S. Matthews acquired 10,000 shares, paying $57.69 per share for a total amount of $576,900. Mr. Matthews increased his stake by 16.89% to 69,202 shares with this purchase.
  • COO and CFO Michael Scarpa acquired 5,000 shares, paying $56.32 per share for a total amount of $281,600. Mr. Scarpa increased his stake by 5.88% to 89,962 shares with this purchase.
  • Director John E. Bachman acquired 2,800 shares, paying $55.80 per share for a total amount of $156,240. Mr. Bachman increased his stake by 66.54% to 7,008 shares with this purchase.

In the world of retail and especially the niche that focuses on children’s apparel, Children’s Place has stood out for managing its business well even as competitors like Gymboree went private and eventually bankrupt. I have had the stock on my watch list for nearly a decade and never purchased shares even as the stock rose from around $25 all the way to $160 in October 2018.

The stock has been hit hard after revenue growth turned negative in three of the last four quarters. Even though comparable same store sales went up 0.8% in fiscal Q3, their weak holiday forecast sent the stock down more than 23% on December 11th. The CEO and CFO purchased shares two days later and the directors purchased shares on December 16th. Ms. Elfers has been the CEO of Children’s Place since 2010 and Mr. Scarpa has been the CFO since 2012. The last time we saw insider buying in Children’s Place was in 2012.

It is possible that this weakness is temporary and Children’s Place will turn a corner soon but I would wait to see the signs of the turnaround instead of anticipating it in advance. Like value investors, insiders tend to be early and often buy shares after large one day declines in the stock.

You can view the list of recent insider transactions for The Children’s Place, Inc. here.

P/E: 16.46 Forward P/E: 9.86 Industry P/E: 24.22
P/S: 0.5 Price/Book: 3.78 EV/EBITDA: 9.8
Market Cap: $950.29M Avg. Daily Volume: 894,270 52 Week Range: $53.62 – $116.84

3. Agree Realty Corporation (ADC): $68.29

Shares of this retail REIT were acquired by 4 insiders:

  • Executive Chairman of Board Richard Agree acquired 22,000 shares, paying $68.33 per share for a total amount of $1.5 million. Mr. Agree increased his stake by 5.31% to 436,613 shares with this purchase. 10,000 of these shares were purchased indirectly by Mr. Agree’s wife.
  • Director William S. Rubenfaer acquired 2,000 shares, paying $67.92 per share for a total amount of $135,840. Mr. Rubenfaer increased his stake by 9.63% to 22,776 shares with this purchase.
  • Director Greg Lehmkuhl acquired 500 shares, paying $69.55 per share for a total amount of $34,775. Mr. Lehmkuhl increased his stake by 9.03% to 6,036 shares with this purchase.
  • Director Craig Erlich acquired 273 shares, paying $68.36 per share for a total amount of $18,662. These shares were purchased indirectly by Mr. Erlich’s children.

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

P/E: 37.9 Forward P/E: 37.52 Industry P/E: 37.03
P/S: 15.73 Price/Book: 1.94 EV/EBITDA: 25.61
Market Cap: $2.9B Avg. Daily Volume: 312,293 52 Week Range: $56.46 – $79.54

4. FedEx Corporation (FDX): $148.12

Director John A. Edwardson acquired 10,000 shares of FedEx, paying $148.22 per share for a total amount of $1.48 million. Mr. Edwardson increased his stake by 14.71% to 77,966 shares with this purchase.

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

P/E: 544.56 Forward P/E: 11.58 Industry P/E: 24.90
P/S: 0.56 Price/Book: 2.07 EV/EBITDA: 15.68
Market Cap: $38.68B Avg. Daily Volume: 2,852,904 52 Week Range: $137.78 – $199.32

5. Energy Transfer LP (ET): $13.07

Director Richard D. Brannon acquired 100,000 shares of this oil & gas midstream company, paying $12.79 per share for a total amount of $1.28 million. Mr. Brannon increased his stake by 52.93% to 288,932 shares with this purchase.

You can view the list of recent insider transactions for Energy Transfer LP here.

P/E: 10.5 Forward P/E: 8.49 Industry P/E: 14.12
P/S: 0.65 Price/Book: 1.64 EV/EBITDA: 8.87
Market Cap: $35.09B Avg. Daily Volume: 16,331,562 52 Week Range: $10.84 – $15.98

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

Notable Insider Sales:

1. Uber Technologies, Inc. (UBER): $30.45

Shares of Uber were sold by 3 insiders:

  • Director Travis Cordell Kalanick sold 12,790,960 shares for $29.96, generating $383.22 million from the sale.
  • Director Garrett Camp sold 510,000 shares for $29.90, generating $15.25 million from the sale. These shares were sold indirectly by Expa-1, LLC.
  • Chief Technology Officer Thuan Pham sold 20,000 shares for $30.00, generating $600,000 from the sale.

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

P/E: N/A Forward P/E: -13.01 Industry P/E: 38.68
P/S: 3.98 Price/Book: 3.44 EV/EBITDA: -5.97
Market Cap: $51.94B Avg. Daily Volume: 24,744,714 52 Week Range: $25.58 – $47.08

2. Continental Resources, Inc. (CLR): $33.72

CEO & Chairman Harold Hamm sold 1,779,496 shares of this oil & gas exploration company for $33.87, generating $60,278,170 from the sale.

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

P/E: 16.13 Forward P/E: 15.12 Industry P/E: N/A
P/S: 2.99 Price/Book: 1.9 EV/EBITDA: 5.47
Market Cap: $12.52B Avg. Daily Volume: 2,635,578 52 Week Range: $27.26 – $52.04

3. salesforce.com, inc. (CRM): $164.55

Shares of this software application company were sold by 7 insiders:

  • Chairman of the Board & co-CEO Marc Benioff sold 118,188 shares for $162.22, generating $19.17 million from the sale.
  • President and CFO Mark J. Hawkins sold 31,842 shares for $161.42, generating $5.14 million from the sale.
  • Pres/Chief Engineering Officer Srinivas Tallapragada sold 30,000 shares for $161.64, generating $4.85 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-CEO Keith Block sold 25,911 shares for $161.99, generating $4.19 million from the sale.
  • Co-Founder and CTO Parker Harris sold 21,349 shares for $161.98, generating $3.46 million from the sale.
  • Pres. & Chief Product Officer Alexandre Dayon sold 20,729 shares for $161.99, generating $3.36 million from the sale.
  • Pres., Legal & General Counsel Amy E. Weaver sold 10,365 shares for $161.99, generating $1.68 million from the sale.

You can view the list of recent insider transactions for salesforce.com, inc. here.

P/E: 136.67 Forward P/E: 53.08 Industry P/E: 45.17
P/S: 9.8 Price/Book: 7.48 EV/EBITDA: 69.35
Market Cap: $144.31B Avg. Daily Volume: 4,826,992 52 Week Range: $120.16 – $167.56

4. Workday, Inc. (WDAY): $167.16

Shares of this software application company were sold by 3 insiders:

  • Director David A. Duffield sold 175,000 shares for $160.60, generating $28.11 million from the sale. These shares were sold indirectly by the Dave & Cheryl Duffield Foundation.
  • Co-President Chano Fernandez sold 7,344 shares for $160.25, generating $1.18 million from the sale.
  • Chief Products Officer Petros Dermetzis sold 5,290 shares for $160.33, generating $848,161 from the sale.

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

P/E: N/A Forward P/E: 76.33 Industry P/E: 45.17
P/S: 11.18 Price/Book: 16.58 EV/EBITDA: -198.77
Market Cap: $38.45B Avg. Daily Volume: 2,176,007 52 Week Range: $141.7 – $226.83

5. Intuit Inc. (INTU): $267.1

Chairman of Exec. Committee Scott D. Cook sold 112,022 shares of this software application company for $266.16, generating $29.82 million from the sale. These shares were sold indirectly by a trust.

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

P/E: 44.67 Forward P/E: 31.28 Industry P/E: 45.17
P/S: 10.03 Price/Book: 19.14 EV/EBITDA: 32.75
Market Cap: $69.53B Avg. Daily Volume: 1,353,114 52 Week Range: $182.61 – $295.77

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 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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