Welcome to edition 526 of Insider Weekends. Last week was a repeat of the uptrend we have been seeing in the market with the S&P 500 up more than 1.2% and the Nasdaq up 2.2%. Over the last three months the S&P 500 is up over 12% and the Nasdaq more than 21%. Considering we had barely exited the first phase of COVID-19 before being hit by phase 2, the cognitive dissonance between the financial markets and Main Street is stark.
States like New York, New Jersey and Washington state that were hard hit in phase 1 have done much better now and both the rates of new infection and deaths are down. In contrast, states like California, Arizona, Texas and Florida are seeing huge spikes in both new cases and deaths compared to phase 1. With deaths lagging new infections by several weeks, we are likely to see a uptick in deaths in coming weeks unless new treatments like Remdesivir can reduce the fatality rate.
Going into this crisis, I was optimistic that this could be a one quarter event and that we will start seeing a rebound in economic activity in Q3 and Q4. Many countries around the world including Italy, South Korea, Japan, Singapore, China and Taiwan, to name a few, have achieved this. In contrast, the U.S., Brazil and India are having a hard time controlling COVID-19 and may see multiple shut downs and reopenings. Ample liquidity, the Fed actively participating in the markets and massive stimulus programs have helped with the positive market momentum and this momentum is drawing in both institutional and retail investors.
This situation reminds of the infamous words of Citigroup’s ex-CEO Chuck Prince from mid-2007 right before the housing crisis accelerated and triggered the Great Recession,
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”
I feel that we are in a situation akin to mid-2007 but it is possible that I am seeing things from a lens that holds memories of multiple past crises and maybe this time is indeed different.
Insider buying increased last week with insiders purchasing $120.09 million of stock compared to $88.33 million in the week prior. Selling decreased with insiders selling $767.49 million of stock last week compared to $893.42 million 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 6.39. In other words, insiders sold more than 6 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 10.12.
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. Postal Realty Trust, Inc. (PSTL): $13.4
CEO and Director Andrew Spodek acquired 78,195 shares of this office REIT, paying $13.03 per share for a total amount of $1.02 million. These shares were purchased indirectly through a trust.
Postal Realty Trust has only been a public company for a little over a year, pricing its IPO at $17 per share in May 2019. This office REIT has a single tenant, the U.S. Post Office, and owns 608 properties in 49 states. The company has more than doubled revenue since going public and appears to be focusing on acquisitions. Towards this end, Postal Realty Trust recently completed a secondary offering priced at $13 per share. Most of this large purchase by the CEO is related to participating in the secondary offering.
Reviewing the details of the form 4 filing, it looks like he purchased 3,195 shares independent of the offering at $13.75 per share. He also acquired 26,600 shares paying $354,601 over the course of several weeks in March. Considering the market cap of the company is just $120 million, these purchases are sizable.
The biggest risk for this office REIT is its tenant concentration, especially when the tenant perpetually appears to be in financial trouble. On the positive side, this office REIT is growing rapidly (albeit off a small base) and sports a dividend yield approaching nearly 6%.
You can view the list of recent insider transactions for Postal Realty Trust, Inc. here.
|P/E: N/A||Forward P/E: -191.43||Industry P/E: 30.53|
|P/S: 5.01||Price/Book: 1.45||EV/EBITDA: 38.74|
|Market Cap: $72.48M||Avg. Daily Volume: 45,844||52 Week Range: $10.84 – $19.48|
2. Avid Technology, Inc. (AVID): $7.54
Director Christian Asmar acquired 108,102 shares of this technology hardware, software and peripherals company, paying $6.93 per share for a total amount of $749,192. These shares were purchased indirectly by Impactive Capital GP LLC.
You can view the list of recent insider transactions for Avid Technology, Inc. here.
|P/E: 188.5||Forward P/E: 9.79||Industry P/E: 26.58|
|P/S: 0.83||Price/Book: N/A||EV/EBITDA: 15.23|
|Market Cap: $329.48M||Avg. Daily Volume: 657,107||52 Week Range: $4.67 – $10.79|
3. Brainstorm Cell Therapeutics Inc. (BCLI): $14.58
Shares of this biotech company were acquired by 2 insiders:
- Director Sankesh Abbhi acquired 46,779 shares, paying $12.99 per share for a total amount of $607,659. These shares were purchased indirectly by Abbhi Investments.
- EVP and COO David Setboun acquired 5,000 shares, paying $12.95 per share for a total amount of $64,740. Mr. Setboun increased his stake by 10.00% to 55,000 shares with this purchase.
You can view the list of recent insider transactions for Brainstorm Cell Therapeutics Inc. here.
|P/E: N/A||Forward P/E: -20.83||Industry P/E: 1,613.96|
|P/S: N/A||Price/Book: 45.99||EV/EBITDA: -14.61|
|Market Cap: $429.25M||Avg. Daily Volume: 662,555||52 Week Range: $3.43 – $14.84|
4. Perspecta Inc. (PRSP): $23.26
Shares of this enterprise information technology (IT) services provider were acquired by 2 insiders:
- Director, CEO John M. Curtis acquired 18,354 shares, paying $21.97 per share for a total amount of $403,237. Mr. Curtis increased his stake by 8.20% to 242,109 shares with this purchase.
- Director Philip O. Nolan acquired 4,585 shares, paying $21.97 per share for a total amount of $100,732. Mr. Nolan increased his stake by 9.18% to 54,557 shares with this purchase.
You can view the list of recent insider transactions for Perspecta Inc. here.
|P/E: N/A||Forward P/E: 12.92||Industry P/E: 44.20|
|P/S: 0.83||Price/Book: 2.75||EV/EBITDA: 9.52|
|Market Cap: $3.74B||Avg. Daily Volume: 1,179,942||52 Week Range: $14.03 – $29.88|
5. AZZ Inc. (AZZ): $32.24
Shares of this electrical equipment & parts company were acquired by 2 insiders:
- President and CEO Thomas E. Ferguson acquired 10,000 shares, paying $28.94 per share for a total amount of $289,376. Mr. Ferguson increased his stake by 10.02% to 109,794 shares with this purchase.
- President & GM – Electrical Ken Lavelle acquired 5,500 shares, paying $30.83 per share for a total amount of $169,565. Mr. Lavelle increased his stake by 114.82% to 10,290 shares with this purchase.
You can view the list of recent insider transactions for AZZ Inc. here.
|P/E: 26||Forward P/E: 11.35||Industry P/E: 31.80|
|P/S: 0.86||Price/Book: 1.33||EV/EBITDA: 7.63|
|Market Cap: $844.53M||Avg. Daily Volume: 224,577||52 Week Range: $19.31 – $49.46|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Zynex, Inc. (ZYXI): $21.42
President, CEO and Chairman Thomas Sandgaard sold 1,250,000 shares of this medical devices company for $22.00, generating $27.5 million from the sale. These shares were sold indirectly by Sandgaard Holdings.
You can view the list of recent insider transactions for Zynex, Inc. here.
|P/E: 71.4||Forward P/E: 32.95||Industry P/E: 50.56|
|P/S: 13.93||Price/Book: 30.38||EV/EBITDA: 57.85|
|Market Cap: $717.46M||Avg. Daily Volume: 1,215,626||52 Week Range: $7.51 – $29.73|
2. T-Mobile US, Inc. (TMUS): $105.35
EVP, Corporate Strategy Peter A. Ewens sold 200,000 shares of T-Mobile for $106.49, generating $21.29 million from the sale.
You can view the list of recent insider transactions for T-Mobile US, Inc. here.
|P/E: 25.94||Forward P/E: 46.82||Industry P/E: 16.07|
|P/S: 2.9||Price/Book: 3.13||EV/EBITDA: 12.97|
|Market Cap: $130.51B||Avg. Daily Volume: 7,803,604||52 Week Range: $63.5 – $111.58|
3. QUALCOMM Incorporated (QCOM): $92.23
Chief Executive Officer Steven M. Mollenkopf sold 219,131 shares of this semiconductor company for $93.66, generating $20.52 million from the sale. These shares were sold indirectly by a trust.
You can view the list of recent insider transactions for QUALCOMM Incorporated here.
|P/E: 27.08||Forward P/E: 15.66||Industry P/E: 27.88|
|P/S: 4.19||Price/Book: 34.13||EV/EBITDA: 11.38|
|Market Cap: $103.75B||Avg. Daily Volume: 9,225,309||52 Week Range: $58 – $96.17|
4. Slack Technologies, Inc. (WORK): $32.11
Shares of this software application company were sold by 5 insiders:
- Chief Executive Officer Stewart Butterfield sold 205,000 shares for $35.53, generating $7.28 million from the sale.
- Director Andrew Braccia sold 21,000 shares for $34.96, generating $734,160 from the sale. These shares were sold indirectly by a trust.
- Director John O’Farrell sold 10,000 shares for $35.03, generating $350,300 from the sale. These shares were sold indirectly by a trust.
- Chief Technology Officer Cal Henderson sold 6,000 shares for $33.13, generating $198,805 from the sale. These shares were sold indirectly by a trust.
- General Counsel and Secretary David Schellhase sold 5,000 shares for $34.02, generating $170,100 from the sale.
You can view the list of recent insider transactions for Slack Technologies, Inc. here.
|P/E: N/A||Forward P/E: -152.91||Industry P/E: 51.87|
|P/S: 25.96||Price/Book: 24.09||EV/EBITDA: -30.88|
|Market Cap: $18.1B||Avg. Daily Volume: 20,233,166||52 Week Range: $15.1 – $40.07|
5. Chewy, Inc. (CHWY): $46.8
Shares of this online pet supplies company were sold by 3 insiders:
- Director James Kevin Symancyk sold 100,000 shares for $50.86, generating $5.09 million from the sale.
- General Counsel Susan Helfrick sold 37,062 shares for $48.90, generating $1.81 million from the sale.
- Chief Technology Officer Satish Mehta sold 21,919 shares for $47.26, generating $1.04 million from the sale.
You can view the list of recent insider transactions for Chewy, Inc. here.
|P/E: N/A||Forward P/E: -93.6||Industry P/E: 78.19|
|P/S: 3.51||Price/Book: N/A||EV/EBITDA: -78.64|
|Market Cap: $18.79B||Avg. Daily Volume: 4,406,690||52 Week Range: $20.62 – $52.77|
You can view the full list of sales from this Insider Sales page.
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.