Insider Weekends: Insider Buying At Another Midstream Energy Company

Welcome to edition 494 of Insider Weekends. Insider buying decreased last week with insiders purchasing $73.75 million of stock last week compared to $76.94 million in the week prior. Selling on the other hand increased with insiders selling $1.87 billion of stock last week compared to $1.57 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 went up to 25.42. In other words, insiders sold more than 25 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 20.41.

Insider Sector Heat Map December 6, 2019

Insider Sector Heat Map December 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. Enterprise Products Partners L.P. (EPD): $26.25

Chairman of the Board, Randa Duncan Williams acquired 725,660 units of this oil & gas midstream company, paying $25.92 per share for a total amount of $18.81 million. These units were purchased indirectly by various trusts.

This is the fourth week in a row energy midstream companies have made our list of notable insider purchases. We wrote about Kinder Morgan (KMI) multiple times in the past, featured the insider purchase by Bill Greehey of NuStar Energy (NS) last week and are now seeing insider buying in one of the largest energy midstream companies.

The entire sector has been hard hit in the last five years as you can see from the chart below and some of the larger midstream companies have used the downturn to increase their acquisitions, including those of bankrupt smaller companies, which is often a sign that the bottom is near.

One way to avoid betting on a single midstream company, increasing the distribution yield and not worry about K-1 tax forms, is to consider an instrument like the Alerian MLP ETF (AMLP). It has over $7 billion in assets under management, is fairly liquid (average daily volume of 21 million shares traded over a three month period), sports a dividend of 10% and has an expense ratio of 0.85%. The ETF gives you exposure to both Enterprise Product Partners (its top holding) and NuStar Energy but does not include Kinder Morgan as KMI is no longer a master limited partnership (MLP) but has a traditional C corporation structure.

EPD, NS, KMI and AMLP 5 Year Chart

EPD, NS, KMI and AMLP 5 Year Chart

Besides paying an expense ratio that is higher than most ETFs, the other downside of the AMLP ETF is a concentrated portfolio of just 22 positions and MLP companies increasingly choosing to convert into C corporations thanks to the lower corporate tax rate that went into effect in 2018. The ETF has performed worse than EPD, KMI and NS over the last 5 years and especially during the last year.

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

P/E: 12.09 Forward P/E: 11.77 Industry P/E: 13.66
P/S: 1.69 Price/Book: 2.35 EV/EBITDA: 11.01
Market Cap: $57.47B Avg. Daily Volume: 4,728,912 52 Week Range: $23.33 – $30.87

2. Eastman Kodak Company (KODK): $2.7

Shares of this global commercial printing and imaging company were acquired by 3 insiders:

  • Director George Karfunkel acquired 4,437,605 shares, paying $2.50 per share for a total amount of $11.09 million. Mr. Karfunkel increased his stake by 195.60% to 6,706,276 shares with this purchase.
  • Director Philippe D. Katz acquired 2,218,803 shares, paying $2.50 per share for a total amount of $5.55 million. These shares were purchased indirectly by KF Investors LLC.
  • Executive Chairman James V. Continenza acquired 53,263 shares, paying $2.45 per share for a total amount of $130,494. Mr. Continenza increased his stake by 53.26% to 153,263 shares with this purchase.

You can view the list of recent insider transactions for Eastman Kodak Company here.

P/E: 0.8 Forward P/E: N/A Industry P/E: 20.80
P/S: 0.09 Price/Book: 0.68 EV/EBITDA: 2.79
Market Cap: $116.7M Avg. Daily Volume: 121,182 52 Week Range: $1.87 – $3.78

3. Palo Alto Networks, Inc. (PANW): $226.39

Chief Executive Officer Nikesh Arora acquired 25,000 shares of this network security company, paying $221.54 per share for a total amount of $5.54 million. Mr. Arora increased his stake by 5.50% to 479,429 shares with this purchase.

You can view the list of recent insider transactions for Palo Alto Networks, Inc. here.

P/E: N/A Forward P/E: 36.05 Industry P/E: 42.69
P/S: 7.35 Price/Book: 14.57 EV/EBITDA: 234.54
Market Cap: $22.18B Avg. Daily Volume: 1,292,020 52 Week Range: $168.81 – $260.63

4. Cigna Corporation (CI): $198.93

Director Eric J. Foss acquired 10,200 shares of this healthcare insurance company, paying $195.41 per share for a total amount of $1.99 million. Mr. Foss increased his stake by 65.88% to 25,683 shares with this purchase.

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

P/E: 16.38 Forward P/E: 10.71 Industry P/E: 27.50
P/S: 0.57 Price/Book: 1.66 EV/EBITDA: 10.15
Market Cap: $74.29B Avg. Daily Volume: 2,072,588 52 Week Range: $141.95 – $213.71

5. MTS Systems Corporation (MTSC): $47.26

Shares of this test systems, motion simulators, and sensors supplier were acquired by 5 insiders:

  • President, Sensors David Hore acquired 10,880 shares, paying $45.84 per share for a total amount of $498,701. Mr. Hore increased his stake by 36.49% to 40,697 shares with this purchase.
  • Director Linda Zukauckas acquired 4,400 shares, paying $46.49 per share for a total amount of $204,538. Ms. Zukauckas increased her stake by 242.42% to 6,215 shares with this purchase.
  • President and CEO Jeffrey A. Graves acquired 2,000 shares, paying $46.40 per share for a total amount of $92,800. Mr. Graves increased his stake by 2.77% to 74,312 shares with this purchase.
  • Director Chun Hung Yu acquired 1,000 shares, paying $46.50 per share for a total amount of $46,496. Mr. Yu increased his stake by 4.95% to 21,193 shares with this purchase.
  • EVP & President Test & Simulation Steven B. Harrison acquired 900 shares, paying $44.55 per share for a total amount of $40,095. Mr. Harrison increased his stake by 5.00% to 18,902 shares with this purchase.

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

P/E: 21.38 Forward P/E: 16.64 Industry P/E: 27.15
P/S: 1.01 Price/Book: 1.87 EV/EBITDA: 8.51
Market Cap: $904.58M Avg. Daily Volume: 113,147 52 Week Range: $38.42 – $63.31

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

Notable Insider Sales:

1. Uber Technologies, Inc. (UBER): $27.86

Director Travis Cordell Kalanick sold 7,441,033 shares of Uber for $29.14, generating $216.84 million from the sale.

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

P/E: N/A Forward P/E: -11.86 Industry P/E: 37.28
P/S: 3.64 Price/Book: 3.15 EV/EBITDA: -5.59
Market Cap: $47.52B Avg. Daily Volume: 20,044,146 52 Week Range: $25.58 – $47.08

2. Sun Communities, Inc. (SUI): $159

Chairman & CEO Gary A. Shiffman sold 115,000 shares of this residential REIT for $162.13, generating $18.64 million from the sale.

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

P/E: 99 Forward P/E: 79.5 Industry P/E: 36.68
P/S: 12.05 Price/Book: 4.09 EV/EBITDA: 30.55
Market Cap: $14.74B Avg. Daily Volume: 584,169 52 Week Range: $96.95 – $166.32

3. salesforce.com, inc. (CRM): $158.01

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

  • President and CFO Mark J. Hawkins sold 87,774 shares for $160.14, generating $14.06 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chairman of the Board & co-CEO Marc Benioff sold 25,000 shares for $159.56, generating $3.99 million from the sale.
  • Co-Founder and CTO Parker Harris sold 620 shares for $160.41, generating $99,453 from the sale. These shares were sold indirectly through a trust.

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

P/E: 131.24 Forward P/E: 50.97 Industry P/E: 42.69
P/S: 9.41 Price/Book: 7.18 EV/EBITDA: 69.35
Market Cap: $138.57B Avg. Daily Volume: 4,827,285 52 Week Range: $120.16 – $167.56

4. Jefferies Financial Group Inc. (JEF): $21.23

Chairman of the Board Joseph S. Steinberg sold 780,315 shares of this financial services company for $21.03, generating $16.41 million from the sale. 257,505 of these shares were sold indirectly by Mr. Steinberg’s wife.

You can view the list of recent insider transactions for Jefferies Financial Group Inc. here.

P/E: 6.72 Forward P/E: 15.06 Industry P/E: 15.95
P/S: 1.23 Price/Book: 0.64 EV/EBITDA: 43.62
Market Cap: $6.42B Avg. Daily Volume: 3,008,276 52 Week Range: $15.1685 – $21.35

5. Keysight Technologies, Inc. (KEYS): $103.2

Shares of this scientific & technical instruments company were sold by 3 insiders:

  • President, CEO & Chairman BOD Ronald S. Nersesian sold 109,624 shares for $103.80, generating $11.38 million from the sale.
  • VP and Controller John C. Skinner sold 8,327 shares for $103.17, generating $859,114 from the sale.
  • SVP Ingrid A. Estrada sold 7,624 shares for $107.28, generating $817,903 from the sale.

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

P/E: 31.75 Forward P/E: 18.36 Industry P/E: 27.15
P/S: 4.5 Price/Book: 6.44 EV/EBITDA: 18.73
Market Cap: $19.35B Avg. Daily Volume: 1,402,485 52 Week Range: $55.914 – $110

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: 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

Leave A Comment

You must be logged in to post a comment.