Welcome to edition 522 of Insider Weekends. The S&P 500 managed to gain almost 2% last week buoyed by the reopening of various states and even certain counties in California. The county I live in opened restaurants, bars and salons last week, essentially leapfrogging into an expanded stage 2 reopening as laid out in California’s reopening roadmap.
COVID-19 cases continue to increase in the US and last week accounted for the highest number of cases in the last six weeks. One could point to the fact that with more testing, there will be more cases identified and there is some credence to that line of thought as you can see from the number of deaths in the chart below. Anyone who can read a stock chart can see that it points to lower lows and the trend is down. However we are not out of this situation and the next month will be critical in determining if we have turned the corner or the reopenings are going to cause an increase in COVID-19 related deaths. In our Ten Year Anniversary edition of Insider Weekends last week I wrote that our economic future appears to be inextricably linked to an effective COVID-19 vaccine and I plan to position more defensively going forward. The volatile market rally last week has not changed my opinion and I continue to remain defensively positioned.
Insider buying doubled last week with insiders purchasing $123.37 million of stock compared to $61.84 million in the week prior. Selling, on the other hand decreased significantly with insiders selling $1.28 billion of stock last week compared to $2.44 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 10.39. In other words, insiders sold more than 10 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 39.54.
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. AXIS Capital Holdings Limited (AXS): $43.3
Director Charles A. Davis acquired 1,347,707 shares of this insurance company, paying $41.31 per share for a total amount of $55.67 million. These shares were purchased indirectly by Trident Capital.
Mr. Davis has been on AXIS Capital’s Board of Directors since the company’s inception in 2001. He is also the CEO of Stone Point Capital, a firm that raised its eighth private equity fund, Trident VIII, with $7 billion in total commitment. Before Stone Point, Mr. Davis was a partner at Goldman Sachs for 23 years.
He purchased 25,000 shares at an average price of $49.90 on Feb 28, 2018 for $1.25 million and then nearly two years later purchased nearly $20 million worth of stock in March 2020. This latest group of purchases are his biggest purchases of AXIS Capital stock as you can see here.
AXIS Capital operates in the insurance and reinsurance sectors and as one would expect was impacted by the COVID-19 situation. The company reported a large loss of $1.94 per share on revenue of $1.68 billion in Q1 2020 but Mr. Davis probably sees opportunity in a sector most others perceive as troubled.
You can view the list of recent insider transactions for AXIS Capital Holdings Limited here
|P/E: N/A||Forward P/E: 8.89||Industry P/E: 11.09|
|P/S: 0.73||Price/Book: 0.85||EV/EBITDA: 36|
|Market Cap: $3.65B||Avg. Daily Volume: 966,618||52 Week Range: $31.82 – $67.51|
2. HC2 Holdings, Inc. (HCHC): $3.78
Shares of this construction and engineering company were acquired by 2 insiders:
- Director Avram A. Glazer acquired 961,233 shares, paying $3.69 per share for a total amount of $3.55 million. These shares were purchased indirectly by Lancer Capital.
- Director Michael Gorzynski acquired 110,600 shares, paying $3.66 per share for a total amount of $404,348. These shares were purchased indirectly by Percy Rockdale LLC and Rio Royal LLC.
You can view the list of recent insider transactions for HC2 Holdings, Inc. here.
|P/E: N/A||Forward P/E: -3.02||Industry P/E: N/A|
|P/S: 0.09||Price/Book: 12.48||EV/EBITDA: 9.78|
|Market Cap: $175.96M||Avg. Daily Volume: 383,014||52 Week Range: $1.29 – $4.33|
3. Accelerate Diagnostics, Inc. (AXDX): $11.96
Director Jack W. Schuler acquired 358,572 shares of this diagnostics & research company, paying $9.42 per share for a total amount of $3.38 million. These shares were purchased indirectly through a trust.
This is the second week in a row Accelerate Diagnostics made our list of top insider purchases. It was interesting to see Mr. Schuler continue to purchase shares despite the big run up in the stock last week. We wrote the following about Accelerate Diagnostics and Mr. Schuler last week,
Accelerate had seen a big acceleration in revenue as it sold its diagnostic systems for antibiotic resistance and hospital acquired infections before the COVID-19 pandemic hit. Revenue of $2.34 million for Q1 2020 still increased 34% year-over-year but paled in comparison to the 94% and 68% growth in the prior two quarters. The company continues to report huge losses but is expected to continue down its path of high revenue growth based on analyst estimates.
The company hired Jack Phillips as its COO last August and less than four months later announced that he would take on the role of CEO on February 1, 2020. Mr. Phillips joined Accelerate Diagnostics from Roche Diagnostics, the world’s leading diagnostics company.
Mr. Schuler has been buying Accelerate stock on the open market consistently since March 23rd. Mr. Schuler has been on Accelerate’s Board of Directors since 2012 and was the Chairman of the Board of Ventana Medical Systems, a company that was acquired by Roche. He previously served as the President and COO of Abbott Laboratories.
You can view the list of recent insider transactions for Accelerate Diagnostics, Inc. here.
|P/E: N/A||Forward P/E: -10.87||Industry P/E: 45.98|
|P/S: 66.85||Price/Book: N/A||EV/EBITDA: -10.23|
|Market Cap: $661.04M||Avg. Daily Volume: 527,125||52 Week Range: $4.53 – $24|
4. Liquidity Services, Inc. (LQDT): $5.84
Chairman of the Board and CEO William P. Angrick II acquired 350,000 shares of this online auction company, paying $5.93 per share for a total amount of $2.08 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Liquidity Services, Inc. here.
|P/E: N/A||Forward P/E: -584||Industry P/E: 70.49|
|P/S: 0.91||Price/Book: 1.84||EV/EBITDA: -14.71|
|Market Cap: $198.68M||Avg. Daily Volume: 210,893||52 Week Range: $3.01 – $8.34|
5. Cigna Corporation (CI): $191.4
Director Eric J. Foss acquired 5,460 shares of this health service organization, paying $187.37 per share for a total amount of $1.02 million. Mr. Foss increased his stake by 20.85% to 31,642 shares with this purchase.
You can view the list of recent insider transactions for Cigna Corporation here.
|P/E: 14.69||Forward P/E: 9.37||Industry P/E: 22.48|
|P/S: 0.46||Price/Book: 1.57||EV/EBITDA: 8.96|
|Market Cap: $70.62B||Avg. Daily Volume: 2,113,946||52 Week Range: $118.5 – $224.64|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. HEICO Corporation (HEI): $111.25
Shares of this aerospace and defense products company were sold by 3 insiders:
- Co-President Eric A. Mendelson sold 100,000 shares for $92.21, generating $9.22 million from the sale.
- COB and CEO Laurans A. Mendelson sold 90,888 shares for $91.05, generating $8.28 million from the sale.
- Co-President Victor H. Mendelson sold 90,886 shares for $91.18, generating $8.29 million from the sale.
You can view the list of recent insider transactions for HEICO Corporation here.
|P/E: 41.98||Forward P/E: 57.80||Industry P/E: 29.76|
|P/S: 7.44||Price/Book: 8.04||EV/EBITDA: 24.95|
|Market Cap: $13.274B||Avg. Daily Volume: 858,914||52 Week Range: $52.01 – $147.93|
2. Paycom Software, Inc. (PAYC): $318.16
Director Robert J. Levenson sold 82,000 shares of this cloud-based human capital management (HCM) software company for $301.51, generating $24.72 million from the sale. 12,000 of these shares were sold indirectly by Lenox Capital Group, LLC.
You can view the list of recent insider transactions for Paycom Software, Inc. here.
|P/E: 94.66||Forward P/E: 70.55||Industry P/E: 49.18|
|P/S: 23.89||Price/Book: 30.57||EV/EBITDA: 65.02|
|Market Cap: $18.63B||Avg. Daily Volume: 991,621||52 Week Range: $163.42 – $342|
3. Ares Management Corporation (ARES): $39.02
Co-Founder & Executive Chairman Antony P. Ressler sold 610,886 shares of this asset management company for $38.74, generating $23.67 million from the sale. These shares were sold indirectly by TJ Capital Investors, LLC.
You can view the list of recent insider transactions for Ares Management Corporation here.
|P/E: 99.8||Forward P/E: 18.06||Industry P/E: 19.82|
|P/S: 3.97||Price/Book: 8.61||EV/EBITDA: 87.01|
|Market Cap: $5.17B||Avg. Daily Volume: 1,138,301||52 Week Range: $20.2 – $41.88|
4. The Liberty SiriusXM Group (LSXMA): $35.69
Shares of this media company were sold by 4 insiders:
- Chairman of the Board John C. Malone sold 500,000 shares for $36.21, generating $18.1 million from the sale.
- Chief Corporate Development Officer Albert E. Rosenthaler sold 1,900 shares for $35.76, generating $67,947 from the sale.
- CAO/PFO Brian J. Wendling sold 1,030 shares for $35.60, generating $36,671 from the sale. 96 of these shares were sold as a result of exercising options immediately prior to the sale.
- Chief Legal Officer Renee L. Wilm sold 748 shares for $35.71, generating $26,714 from the sale. 135 of 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 The Liberty SiriusXM Group here.
|P/E: 18.63||Forward P/E: 14.05||Industry P/E: 16.66|
|P/S: 1.56||Price/Book: 1.04||EV/EBITDA: 11.53|
|Market Cap: $12.49B||Avg. Daily Volume: 1,369,600||52 Week Range: $22.1632 – $50.2557|
5. Q2 Holdings, Inc. (QTWO): $80.54
Director R. H. Seale sold 200,000 shares of this cloud-based digital banking solutions provider for $80.21, generating $16.04 million from the sale. These shares were sold indirectly by RHS Investments-I, L.P.
You can view the list of recent insider transactions for Q2 Holdings, Inc. here.
|P/E: N/A||Forward P/E: 309.77||Industry P/E: 49.18|
|P/S: 12.73||Price/Book: 10.93||EV/EBITDA: -97|
|Market Cap: $4.29B||Avg. Daily Volume: 571,357||52 Week Range: $47.17 – $93.9|
You can view the full list of sales from this Insider Sales page.
Disclaimer: I hold a long position in Liquidity Services (LQDT). 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.