Insider Weekends: A Cluster Of Purchases By Insiders Of Simply Good Foods

Welcome to edition 500 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $48.31 million of stock compared to $7.49 million in the week prior. Selling on the other hand decreased with insiders selling $714.05 million of stock last week compared to $1.19 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 14.78. In other words, insiders sold almost 15 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 158.33. 

Insider Sector Heat Map January 17, 2020

Insider Sector Heat Map January 17, 2020 (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. La Jolla Pharmaceutical Company (LJPC): $7.73

Shares of this biotech company were acquired by 2 insiders:

  • Director Kevin C. Tang acquired 2,971,682 shares, paying $5.87 per share for a total amount of $17.43 million. These shares were purchased indirectly by Tang Capital Partners.
  • Chief Commercial Officer Darryl Wellinghoff acquired 3,000 shares, paying $8.23 per share for a total amount of $24,677. Mr. Wellinghoff increased his stake by 84.63% to 6,545 shares with this purchase.

You can view the list of recent insider transactions for La Jolla Pharmaceutical Company here.

P/E: N/A Forward P/E: -3.01 Industry P/E: N/A
P/S: 10.5 Price/Book: N/A EV/EBITDA: -2.2
Market Cap: $209.93M Avg. Daily Volume: 1,172,719 52 Week Range: $2.3 – $13.9

2. JPMorgan Chase & Co. (JPM): $138.2

Shares of this financial services company were acquired by 2 insiders:

  • CEO Asset & Wealth Management Mary E. Erdoes acquired 51,000 shares, paying $100.00 per share for a total amount of $5.1 million. According to a footnote in the filing these were series HH preferred shares, each representing a one-tenth interest in a share of JPMorgan Chase & Co.
  • Director Mellody L. Hobson acquired 14,600 shares, paying $136.39 per share for a total amount of $1.99 million. These shares were purchased indirectly by a trust.

Ms. Hobson joined the board of JPMorgan in 2018 and has consistently purchased shares of the company every few months since April 2018. She is the  Co-CEO of Ariel Investments, LLC, an investment management firm with nearly $13 billion in assets under management. She has also served on the board of Starbucks since 2005.

The two JPMorgan open market purchases that were very well timed were CEO Jamie Dimon’s $17.1 million purchase in July 2012 at an average price of $34.22 and his $26.59 million purchase in February 2016 at an average price of $53.18.

You can view the list of recent insider transactions for JPMorgan Chase & Co. here.

P/E: 12.89 Forward P/E: 11.94 Industry P/E: 11.32
P/S: 3.87 Price/Book: 1.85 EV/EBITDA: N/A
Market Cap: $426.21B Avg. Daily Volume: 10,404,226 52 Week Range: $98.09 – $141.1

3. Destination XL Group, Inc. (DXLG): $1.26

Shares of this apparel chain were acquired by 10 insiders:

  • Director Willem Mesdag acquired 325,000 shares, paying $1.16 per share for a total amount of $377,537. These shares were purchased indirectly by Red Mountain Capital Partners.
  • Director Jack Boyle acquired 100,000 shares, paying $1.14 per share for a total amount of $114,030. Mr. Boyle increased his stake by 180.53% to 155,391 shares with this purchase.
  • Director Lionel F. Conacher acquired 42,016 shares, paying $1.19 per share for a total amount of $49,999. Mr. Conacher increased his stake by 55.70% to 117,446 shares with this purchase.
  • Director John E. Kyees acquired 25,000 shares, paying $1.14 per share for a total amount of $28,567. Mr. Kyees increased his stake by 71.02% to 60,199 shares with this purchase.
  • President and CEO Harvey S. Kanter acquired 20,000 shares, paying $1.13 per share for a total amount of $22,644. Mr. Kanter increased his stake by 50.00% to 60,000 shares with this purchase.
  • Director Seymour Holtzman acquired 15,000 shares, paying $1.19 per share for a total amount of $17,802. Mr. Holtzman increased his stake by 0.34% to 4,452,424 shares with this purchase.
  • SVP, Store Sales & Operations Anthony Gaeta acquired 9,500 shares, paying $1.09 per share for a total amount of $10,355. Mr. Gaeta increased his stake by 14.50% to 75,000 shares with this purchase.
  • Chief Admin.Officer, GC, Secy Robert S. Molloy acquired 4,000 shares, paying $1.09 per share for a total amount of $4,360. Mr. Molloy increased his stake by 1.96% to 208,261 shares with this purchase.
  • EVP, CFO, Treasurer Peter H. Stratton Jr. acquired 2,000 shares, paying $1.10 per share for a total amount of $2,200. Mr. Stratton increased his stake by 1.53% to 132,787 shares with this purchase.
  • SVPSupply Chain,CustomerFulfil Francis C. Chane acquired 2,000 shares, paying $1.13 per share for a total amount of $2,260. Mr. Chane increased his stake by 1.46% to 138,561 shares with this purchase.

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

P/E: N/A Forward P/E: 63 Industry P/E: 24.78
P/S: 0.13 Price/Book: 1.12 EV/EBITDA: 17.85
Market Cap: $63.44M Avg. Daily Volume: 68,455 52 Week Range: $1.02 – $2.8

4. The Simply Good Foods Company (SMPL): $25.19

Shares of this branded nutritional foods and snack products were acquired by 3 insiders:

  • Director Nomi Ghez acquired 21,275 shares, paying $23.27 per share for a total amount of $495,159. Ms. Ghez increased her stake by 23.88% to 110,350 shares with this purchase.
  • Chief Financial Officer Todd E. Cunfer acquired 5,000 shares, paying $23.30 per share for a total amount of $116,503. Mr. Cunfer increased his stake by 15.74% to 36,765 shares with this purchase.
  • Chairman of the Board James (Jim) M. Kilts acquired 600 shares, paying $23.11 per share for a total amount of $13,868. Mr. Kilts increased his stake by 0.08% to 737,817 shares with this purchase.

If you wanted to own a portfolio of packaged food products and specifically snack food products, The Simply Good Foods Company appears to be the ticket. The company was created by combining Atkins Nutritionals with a special purpose acquisition company (SPAC) called Conyers Park Acquisition Corp. The company currently owns three brands including Simply Protein, Quest Nutrition (acquired November 2019) and Atkins, and plans to expand its brand portfolio through acquisitions.

 

Simply Protein

Simply Protein

I was shocked to see the company valued at 31 times EBITDA and more than 4 times sales. These are asset-light software company valuations and not the kind of valuations you typically see for a snack food business. However as you dig deeper into the company you realize why the market is valuing the company so richly. Last quarter, their revenue growth was in the double digits excluding the impact of the Quest acquisition and adjusted EBITDA grew 19%. Some of the valuation is also being driven by the team that is involved with the company. Conyers Park was sponsored by an affiliate of Centerview Capital, an investment company founded in 2006 by Jim Kilts.

Mr. Kilts now serves as the Chairman of Simply Good Foods Company and was previously the Vice Chairman of the Board at The Procter & Gamble Company. Prior to that, he was the Chairman of the Board, Chief Executive Officer and President of The Gillette Company before the company’s merger with P&G in October 2005. He began his career at General Foods and later transitioned to leadership positions at Kraft Foods and Nabisco.

You can view the list of recent insider transactions for The Simply Good Foods Company here.

P/E: 77.27 Forward P/E: 23.76 Industry P/E: 48.32
P/S: 4.33 Price/Book: 2.03 EV/EBITDA: 31.04
Market Cap: $2.4B Avg. Daily Volume: 1,128,811 52 Week Range: $18.75 – $31.34

5. The Lovesac Company (LOVE): $12.75

Director Andrew R. Heyer acquired 20,000 shares of this home furnishings company, paying $12.81 per share for a total amount of $256,256. Mr. Heyer increased his stake by 117.92% to 36,960 shares with this purchase.

You can view the list of recent insider transactions for The Lovesac Company here.

P/E: N/A Forward P/E: -17.23 Industry P/E: 19.81
P/S: 0.9 Price/Book: 2.19 EV/EBITDA: -24.27
Market Cap: $185.37M Avg. Daily Volume: 426,615 52 Week Range: $10.33 – $46.79

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

Notable Insider Sales:

1. Snap Inc. (SNAP): $19.11

Chief Executive Officer Evan Spiegel sold 2,780,978 shares of this social network company for $18.01, generating $50.08 million from the sale.

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

P/E: N/A Forward P/E: 955.5 Industry P/E: 36.93
P/S: 17.32 Price/Book: 11.46 EV/EBITDA: -26.86
Market Cap: $26.75B Avg. Daily Volume: 24,685,268 52 Week Range: $5.87 – $19.29

2. Shake Shack Inc. (SHAK): $69.91

Director Jonathan D. Sokoloff sold 784,299 shares of this restaurant chain for $61.32, generating $48.09 million from the sale. These shares were sold indirectly by Green Equity Investors Side VI, L.P.

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

P/E: 103.42 Forward P/E: 116.52 Industry P/E: 28.82
P/S: 4.62 Price/Book: 8.1 EV/EBITDA: 37.57
Market Cap: $2.62B Avg. Daily Volume: 1,784,203 52 Week Range: $46.34 – $105.84

3. Copart, Inc. (CPRT): $97.12

Director Thomas N. Tryforos sold 181,344 shares of this online auctions and vehicle remarketing services provider for $95.87, generating $17.39 million from the sale. These shares were sold indirectly by Elias Charles & Co. LLC.

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

P/E: 33.46 Forward P/E: 31.23 Industry P/E: 40.95
P/S: 10.57 Price/Book: 11.72 EV/EBITDA: 27.02
Market Cap: $22.58B Avg. Daily Volume: 1,786,941 52 Week Range: $48.88 – $97.36

4. Walmart Inc. (WMT): $114.96

Executive Vice President Marc E. Lore sold 85,000 shares of Walmart for $115.91, generating $9.85 million from the sale.

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

P/E: 22.99 Forward P/E: 22.07 Industry P/E: 22.93
P/S: 0.63 Price/Book: 4.56 EV/EBITDA: 12.27
Market Cap: $326.16B Avg. Daily Volume: 5,229,907 52 Week Range: $93.11 – $125.38

5. RealPage, Inc. (RP): $57.86

Chairman President & CEO Stephen T. Winn sold 150,000 shares of this software application company for $56.93, generating $8.54 million from the sale. These shares were sold indirectly by Seren Capital, Ltd.

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

P/E: 125.24 Forward P/E: 30.14 Industry P/E: 48.23
P/S: 5.71 Price/Book: 4.66 EV/EBITDA: 35.72
Market Cap: $5.49B Avg. Daily Volume: 630,569 52 Week Range: $51.65 – $65.92

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.

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