Insider Weekends: With Latest Purchase Harold Hamm Owns 80% Of Continental Resources

Welcome to edition 524 of Insider Weekends. Insider buying decreased last week with insiders purchasing $183.24 million of stock compared to $286.95 million in the week prior. Selling also decreased with insiders selling $975.88 million of stock last week compared to $2.21 billion in the week prior. Given that we are at the start of a new quarter and an earnings related quiet period at most companies, insider activity is likely to be muted in coming weeks and I would not read much into the drop in insider buying or selling.

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 5.33. In other words, insiders sold more than 5 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 7.69. 

Insider Sector Heat Map July 3, 2020

Insider Sector Heat Map July 3, 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. Continental Resources, Inc. (CLR): $18.3

Executive Chairman Harold Hamm acquired 4,435,425 shares of this oil and natural gas exploration and production company, paying $16.53 per share for a total amount of $73.31 million. These purchases follow a 3.44 million share purchase for $57.12 million we reported last week.

It is astounding that he would purchase shares worth over $130 million on the open market in the span of two weeks. Following these transactions, he now owns 9.62 million shares directly and an additional 283.12 million shares indirectly through a family LLC. He also owns 64,452 shares through a third entity. In total he owns 292.8 million shares or 80.19% of the shares outstanding.

In addition to his purchases, the company also bought back 8.1 million shares in Q1 2020 at an average price of $15.60 per share, representing more than 2% of total shares outstanding. The company suspended its dividend in April and also announced a suspension of its share buyback program when it reported Q1 2020 results in May.

Continental Resources issued a press release related to Mr. Hamm’s recent purchases where he stated,

“I firmly believe Continental’s current share price reflects an uncommon value as the global pandemic has negatively impacted worldwide crude oil demand. Recent purchases underscore my confidence in the Company’s continued operational excellence and strong financial performance. Continental is poised to deliver significant shareholder value for many years to come and I believe there is no management team more aligned with shareholders than Continental”

Considering some insiders buy to signal the market and not because they believe their stock is undervalued, I am usually skeptical when companies issue a press release highlighting their insider purchases.

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

P/E: 16.88 Forward P/E: -130.71 Industry P/E: N/A
P/S: 1.67 Price/Book: 1.03 EV/EBITDA: 4.03
Market Cap: $6.68B Avg. Daily Volume: 6,036,620 52 Week Range: $6.9 – $42.57

2. NantKwest, Inc. (NK): $11.99

Chairman and CEO Patrick Soon-Shiong acquired 3,710,000 shares of this biotech company, paying $12.12 per share for a total amount of $44.97 million. Mr. Soon-Shiong increased his stake by 18.51% to 23,750,750 shares with this purchase.

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

P/E: N/A Forward P/E: -15.57 Industry P/E: 1,836.23
P/S: 21750.7 Price/Book: 11.51 EV/EBITDA: -19.78
Market Cap: $1.28B Avg. Daily Volume: 2,392,895 52 Week Range: $1.04 – $13.11

3. T-Mobile US, Inc. (TMUS): $106.01

Director Ronald D. Fisher acquired 350,000 shares of T-Mobile, paying $103.00 per share for a total amount of $36.05 million. These shares were purchased indirectly by T-Mo Fisher LLC.

You can view the list of recent insider transactions for T-Mobile US, Inc. here.

P/E: 26.1 Forward P/E: 47.75 Industry P/E: 15.90
P/S: 2.92 Price/Book: 3.15 EV/EBITDA: 13.11
Market Cap: $131.33B Avg. Daily Volume: 7,783,490 52 Week Range: $63.5 – $111.58

4. Principal Financial Group, Inc. (PFG): $40.79

Director Daniel Gelatt acquired 28,148 shares of this insurance company, paying $35.52 per share for a total amount of $999,823. Mr. Gelatt increased his stake by 16.99% to 193,824 shares with this purchase.

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

P/E: 9.12 Forward P/E: 7.17 Industry P/E: 11.02
P/S: 0.66 Price/Book: 0.86 EV/EBITDA: 6.27
Market Cap: $11.17B Avg. Daily Volume: 1,950,487 52 Week Range: $23.31 – $60.81

5. IHS Markit Ltd. (INFO): $75.85

Director Robert P. Kelly acquired 7,000 shares of this business services company, paying $73.32 per share for a total amount of $513,210. Mr. Kelly increased his stake by 6.82% to 109,641 shares with this purchase.

You can view the list of recent insider transactions for IHS Markit Ltd. here.

P/E: 38.44 Forward P/E: 24 Industry P/E: 36.44
P/S: 6.93 Price/Book: 3.71 EV/EBITDA: 23.84
Market Cap: $30.1B Avg. Daily Volume: 2,182,593 52 Week Range: $44.81 – $81.65

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

Notable Insider Sales:

1. Medallia, Inc. (MDLA): $27.93

Director Borge Hald sold 600,000 shares of this software application company for $25.40, generating $15,242,688 from the sale. These shares were sold indirectly by Mr. Hald’s wife.

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

P/E: N/A Forward P/E: -931 Industry P/E: 51.69
P/S: 9.35 Price/Book: 9.31 EV/EBITDA: -28.33
Market Cap: $3.94B Avg. Daily Volume: 1,552,570 52 Week Range: $16.04 – $44.72

2. RealPage, Inc. (RP): $65.42

Chairman President & CEO Stephen T. Winn sold 200,000 shares of this software and data analytics provider for $64.85, generating $12.97 million from the sale. These shares were sold indirectly by Seren Capital Management, L.L.C.

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

P/E: 121.15 Forward P/E: 31.45 Industry P/E: 51.69
P/S: 6.48 Price/Book: 5.17 EV/EBITDA: 41.4
Market Cap: $6.68B Avg. Daily Volume: 892,029 52 Week Range: $36.91 – $69.79

3. 2U, Inc. (TWOU): $39.31

Chief Executive Officer Christopher J. Paucek sold 300,000 shares of this education technology company for $38.87, generating $11.66 million from the sale. 12,662 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 2U, Inc. here.

P/E: N/A Forward P/E: -49.76 Industry P/E: 51.69
P/S: 4 Price/Book: 3.82 EV/EBITDA: -25.91
Market Cap: $2.51B Avg. Daily Volume: 1,918,429 52 Week Range: $11.37 – $40.55

4. Vertex Pharmaceuticals Incorporated (VRTX): $291.1

Executive Chairman Jeffrey M. Leiden sold 32,792 shares of this biotech company for $286.15, generating $9.38 million from the sale.

You can view the list of recent insider transactions for Vertex Pharmaceuticals Incorporated here.

P/E: 50.38 Forward P/E: 26.39 Industry P/E: 1,836.23
P/S: 15.66 Price/Book: 11.67 EV/EBITDA: 40.95
Market Cap: $75.48B Avg. Daily Volume: 2,057,932 52 Week Range: $165.23 – $299.21

5. Tandem Diabetes Care, Inc. (TNDM): $98.58

Shares of this medical device company were sold by 2 insiders:

  • Director Kim D. Blickenstaff sold 50,000 shares for $95.57, generating $4.78 million from the sale. These shares were sold indirectly through a trust.
  • EVP & Chief Financial Officer Leigh Vosseller sold 20,000 shares for $97.74, generating $1.95 million from the sale. 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 Tandem Diabetes Care, Inc. here.

P/E: N/A Forward P/E: 3286 Industry P/E: 46.50
P/S: 15.03 Price/Book: 28.58 EV/EBITDA: -451.35
Market Cap: $5.92B Avg. Daily Volume: 1,295,598 52 Week Range: $43.69 – $103.95

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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