Insider Weekends: Third Insider Of Expedia Buys Shares

Welcome to edition 495 of Insider Weekends. Insider buying declined again with insiders purchasing $60.21 million of stock last week compared to $73.75 million in the week prior. Selling on the other hand increased with insiders selling $2.18 billion of stock last week compared to $1.87 billion in the week prior. As we approach the end of the quarter and companies enter an earnings related quiet period, we are likely to see a decline in insider activity over the next few weeks.

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 36.25. In other words, insiders sold more than 36 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 25.42.

Insider Sector Heat Map December 13, 2019

Insider Sector Heat Map December 13, 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): $27.52

Chairman of the Board, Randa Duncan Williams acquired 636,000 units of this oil & gas midstream company, paying $26.27 per share for a total amount of $16.71 million. These units were purchased indirectly through a trust.

This follows a purchase of $18.81 million by Ms. Williams in the week prior. I expanded on the numerous purchases in the midstream part of the energy sector in a post for premium members last week. Here is what we wrote in our last insider weekends post,

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.

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

P/E: 12.67 Forward P/E: 12.34 Industry P/E: 13.90
P/S: 1.77 Price/Book: 2.46 EV/EBITDA: 11.42
Market Cap: $60.25B Avg. Daily Volume: 4,975,990 52 Week Range: $23.33 – $30.87

2. LMP Automotive Holdings, Inc. (LMPX): $28.69

President and CEO Samer Tawfik acquired 392,920 shares of this auto dealership company, paying $8.75 per share for a total amount of $3.44 million. Mr. Tawfik increased his stake by 17.13% to 2,686,537 shares with this purchase.

More often than not, insiders sell during an IPO as they gain liquidity and can diversify their assets. But every once in a while we see insiders buy more in an IPO. This purchase is highly unusual because Mr. Tawfik has purchased shares multiple times at higher prices since the company went public earlier this month for $5/share. The stock was up 29% last Friday and is up 435% from its first trading day closing price of $5.36 on December 5th.

Looking at the company, it appears to have a single location close to Fort Lauderdale in Florida and allows you to buy, sell, rent or subscribe to cars. It appears to be competing with car dealerships like AutoNation (AN) and Lithia Motors (LAD),  car rental companies like Hertz Global Holdings (HTZ) and Avis Budget Group (CAR) as well as car subscription services like GM’s Maven that it is in the process of scaling down after a tepid response from consumers.

Revenue last quarter was $1.2 million (yes, you read that right), a significant decline from $4.8 million in Q3 2018. As one would expect, the company is posting both operating and net losses. I am not sure why the stock is up so much from its IPO but if I were a betting man and were not aware of the challenges of shorting low liquidity micro-cap stocks, I would surmise that this company would be the perfect short.

You can view the list of recent insider transactions for LMP Automotive Holdings, Inc. here.

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 18.26 Price/Book: 30.33 EV/EBITDA: -32.04
Market Cap: $248.07M Avg. Daily Volume: 1,523,450 52 Week Range: $4.9 – $44

3. Expedia Group, Inc. (EXPE): $112.76

Vice Chairman Peter M. Kern acquired 23,070 shares of this travel services company, paying $108.33 per share for a total amount of $2.49 million. Mr. Kern increased his stake by 34.01% to 90,907 shares with this purchase.

Mr. Kern has been a director of Expedia since the company was spun out of IAC/InterActive in 2005 and has served as Vice Chairman of the Board since June 2018. This is his first open market purchase of Expedia since we started tracking insider data nearly 10 years ago. The only other insider purchases by him in 2013 and 2014 were as a result of an automated dividend reinvestment plan.

We wrote the following about another director, Sam Altman’s, insider purchase two weeks ago,

Sam Altman is a Silicon Valley investor and entrepreneur who worked with the startup accelerator Y Combinator from 2014 to 2019 and left the company to start OpenAI. The group’s mission is “to ensure that artificial general intelligence benefits all of humanity” and it received an investment of $1 billion from Microsoft earlier this year.

Mr. Altman was appointed to Expedia’s board in September 2019 and since new directors often buy stock of the company, I would not read much into the purchase.

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

P/E: 33.76 Forward P/E: 16.15 Industry P/E: 44.73
P/S: 1.38 Price/Book: 3.92 EV/EBITDA: 13.49
Market Cap: $16.34B Avg. Daily Volume: 2,941,565 52 Week Range: $93.53 – $144

4. Sage Therapeutics, Inc. (SAGE): $72.87

Shares of this biotech company were acquired by 2 insiders:

  • Chief Scientific Officer Albert Robichaud acquired 25,000 shares, paying $64.16 per share for a total amount of $1.6 million. Mr. Robichaud increased his stake by 22.44% to 136,400 shares with this purchase.
  • President & CEO Jeffrey M. Jonas acquired 7,500 shares, paying $64.20 per share for a total amount of $481,500. Mr. Jonas increased his stake by 15.95% to 54,530 shares with this purchase.

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

P/E: N/A Forward P/E: -5.3 Industry P/E: N/A
P/S: 728.81 Price/Book: 3.49 EV/EBITDA: -3.87
Market Cap: $3.78B Avg. Daily Volume: 846,839 52 Week Range: $56.5 – $193.56

5. Workday, Inc. (WDAY): $159.46

Director Lee J. Styslinger III acquired 10,000 shares of this software application company, paying $164.54 per share for a total amount of $1.65 million. These shares were purchased indirectly by a wholly owned LLC.

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

P/E: N/A Forward P/E: 72.81 Industry P/E: 44.22
P/S: 10.66 Price/Book: 15.81 EV/EBITDA: -189.48
Market Cap: $36.68B Avg. Daily Volume: 2,112,469 52 Week Range: $141.7 – $226.83

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

Notable Insider Sales:

1. Uber Technologies, Inc. (UBER): $28.49

Shares of Uber were sold by 2 insiders:

  • Director Travis Cordell Kalanick sold 7,878,297 shares for $28.44, generating $224.02 million from the sale.
  • Director Garrett Camp sold 510,000 shares for $28.25, generating $14.41 million from the sale. These shares were sold indirectly by various trusts and entities.

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

P/E: N/A Forward P/E: -12.18 Industry P/E: 37.97
P/S: 3.72 Price/Book: 3.22 EV/EBITDA: -5.56
Market Cap: $48.6B Avg. Daily Volume: 21,220,384 52 Week Range: $25.58 – $47.08

2. TTEC Holdings, Inc. (TTEC): $36.31

Chairman & CEO Kenneth D. Tuchman sold 3,000,000 shares of this customer experience technology and services company for $36.50, generating $109.5 million from the sale.

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

P/E: 24.37 Forward P/E: 18.06 Industry P/E: 37.52
P/S: 1.05 Price/Book: 4.5 EV/EBITDA: 10.32
Market Cap: $1.69B Avg. Daily Volume: 158,485 52 Week Range: $24.53 – $50.45

3. Workday, Inc. (WDAY): $159.46

Shares of this software application company were sold by 4 insiders:

  • Director David A. Duffield sold 309,986 shares for $161.33, generating $50.01 million from the sale.
  • Chief Executive Officer Aneel Bhusri sold 300,000 shares for $161.29, generating $48.39 million from the sale.
  • Chief Products Officer Petros Dermetzis sold 3,464 shares for $161.32, generating $558,804 from the sale.
  • Co-President & CFO Robynne Sisco sold 45 shares for $164.38, generating $7,397 from the sale.

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

P/E: N/A Forward P/E: 72.81 Industry P/E: 44.22
P/S: 10.66 Price/Book: 15.81 EV/EBITDA: -189.48
Market Cap: $36.68B Avg. Daily Volume: 2,112,469 52 Week Range: $141.7 – $226.83

4. Tricida, Inc. (TCDA): $39.46

Shares of this drug manufacturer were sold by 3 insiders:

  • Director David P. Bonita sold 1,500,000 shares for $40.00, generating $60 million from the sale. These shares were sold indirectly by OrbiMed Private Investments V, LP.
  • President and CEO Gerrit Klaerner sold 11,520 shares for $43.42, generating $500,215 from the sale.
  • Director Sandra I. Coufal sold 2,333 shares for $43.20, generating $100,794 from the sale. 1,620 of these shares were sold indirectly through a trust.

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

P/E: N/A Forward P/E: -8.63 Industry P/E: 40.04
P/S: N/A Price/Book: 6.27 EV/EBITDA: -11.31
Market Cap: $1.96B Avg. Daily Volume: 284,685 52 Week Range: $19.43 – $44.3

5. Primoris Services Corporation (PRIM): $22.34

Director Brian Pratt sold 2,316,960 shares of this specialty contractor and infrastructure company for $21.58, generating $49.99 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 13.04 Forward P/E: 11.95 Industry P/E: N/A
P/S: 0.36 Price/Book: 1.74 EV/EBITDA: 7.07
Market Cap: $1.14B Avg. Daily Volume: 161,382 52 Week Range: $17.8 – $23.98

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 long positions in AMLP and 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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