Insider Weekends: Tamara Gustavson Puts $8 Million Into Public Storage

Welcome to edition 534 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $108.3 million of stock compared to $31.16 million in the week prior. Selling also increased significantly with insiders selling $2.07 billion of stock last week compared to $749.85 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 19.1. In other words, insiders sold more than 19 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 24.06.

Insider Sector Heat Map September 18, 2020

Insider Sector Heat Map September 18, 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. Public Storage (PSA): $221.01

Director Tamara Hughes Gustavson acquired 37,031 shares of this self-storage REIT, paying $217.65 per share for a total amount of $8.06 million. Ms. Gustavson increased her stake by 0.22% to 16,889,476 shares with this purchase.

I have seen various insider purchases by Ms. Gustavson and her dad B. Wayne Hughes over the years but almost all those purchases have been of another REIT called American Homes 4 Rent (AMH) as we outlined in our post from March 8th titled Father-Daughter Team At American Homes 4 Rent Buy Again. I started a long position in American Homes 4 Rent after writing the following in a premium post in September 2018:

American Homes 4 Rent (AMH) with its portfolio of 52,049 single-family homes across 22 states was conceived during the depths of the last housing recession by billionaire B. Wayne Hughes. His impeccable timing in scooping up homes very close to the bottom could have been luck but was probably more on account of his decades long-experience with real estate as the founder and CEO of the largest self-storage company Public Storage (PSA). He retired as CEO of PSA in 2002 and stepped down as Chairman in 2011, just in time to start American Homes 4 Rent. The Seattle Times wrote an article about the company in 2013 and we started noticing his insider purchases of AMH in late 2014.

This purchase is however of Public Storage and I looked into the company after Ms. Gustavson’s purchase. It is possible that with the impact of COVID-19, a lot of folks are using more short-term storage facilities as they leave large cities and move with in with family or to the suburbs. We are certainly seeing this trend in the San Francisco Bay Area. However this trend is not reflected in PSA’s results. While Q1 2020 revenue was up 3.42% and the company posted funds from operations (FFO) of $2.58/share, Q2 2020 results were weak with revenue declining 0.23% year-over-year and the company reporting FFO of $2.46/share, 7 cents below estimates.

The $8/share dividend, paid out as $2/share each quarter, appears to be safe with a payout ratio of 77% and works out to an attractive yield of 3.62%. The dividend however has not grown in 4 years and with anemic revenue growth, I am surprised Ms. Gustavson chose to buy more of a company trading at 21 times FFO. Some of her enthusiasm starts to make sense when you look at the balance sheet, which is very strong with $10 billion in depreciated assets and only $1.26 billion in net debt. Common shareholders probably will not benefit anytime soon from the strength of the company’s balance sheet unless those assets are disposed or used for strategic acquisitions.

You can view the list of recent insider transactions for Public Storage here.

P/E: 31.57 Forward P/E: 31.3 Industry P/E: 47.71
P/S: 13.11 Price/Book: 7.94 EV/EBITDA: 23.51
Market Cap: $38.63B Avg. Daily Volume: 821,301 52 Week Range: $155.37 – $249.03

2. IGM Biosciences, Inc. (IGMS): $83.88

Director Kathleen M. Behrens acquired 30,000 shares of this cancer focused biotech company, paying $60.78 per share for a total amount of $1.82 million. Ms. Behrens increased her stake by 47.46% to 93,214 shares with this purchase.

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

P/E: N/A Forward P/E: -42.8 Industry P/E: N/A
P/S: N/A Price/Book: 10.04 EV/EBITDA: -23.6
Market Cap: $2.57B Avg. Daily Volume: 123,145 52 Week Range: $16.1 – $89.81

3. Cassava Sciences, Inc. (SAVA): $10.07

Shares of this biotech company focused on nervous system disorders were acquired by 2 insiders:

  • Director Sanford Robertson acquired 213,719 shares, paying $6.98 per share for a total amount of $1.49 million. Mr. Robertson increased his stake by 32.25% to 876,342 shares with this purchase.
  • Chief Financial Officer Eric Schoen acquired 12,000 shares, paying $7.03 per share for a total amount of $84,380. Mr. Schoen increased his stake by 78.43% to 27,300 shares with this purchase. 2,000 of these shares were purchased indirectly by the Schoen Family LLC.

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

P/E: N/A Forward P/E: -30.52 Industry P/E: N/A
P/S: N/A Price/Book: 10.38 EV/EBITDA: -11.42
Market Cap: $250.94M Avg. Daily Volume: 6,562,167 52 Week Range: $1.05 – $10.95

4. Intra-Cellular Therapies, Inc. (ITCI): $31.45

Director Christopher D. Alafi acquired 49,500 shares of this biotech company focused on disorders of the central nervous system, paying $29.60 per share for a total amount of $1.47 million. These shares were purchased indirectly by Alafi Capital Company, LLC.

You can view the list of recent insider transactions for Intra-Cellular Therapies, Inc. here.

P/E: N/A Forward P/E: -11.11 Industry P/E: N/A
P/S: 814.13 Price/Book: 5.53 EV/EBITDA: -7.72
Market Cap: $2.48B Avg. Daily Volume: 1,849,523 52 Week Range: $6.75 – $43.56

5. Nikola Corporation (NKLA): $34.19

Executive Chairman Trevor R. Milton acquired 41,400 shares of this electric vehicles manufacturer, paying $30.91 per share for a total amount of $1.28 million. These shares were purchased indirectly by M&M Residual.

It was fascinating to see that this insider purchase was filed on the same day Bloomberg reported that the SEC is reviewing claims that the company misled investors.

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

P/E: N/A Forward P/E: N/A Industry P/E: 26.73
P/S: 29448.5 Price/Book: N/A EV/EBITDA: -75.14
Market Cap: $12.96B Avg. Daily Volume: 25,265,442 52 Week Range: $10.2 – $93.99

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

Notable Insider Sales:

1. Scientific Games Corporation (SGMS): $32.96

Executive Chairman Ronald O. Perelman sold 9,375,806 shares of this casino and lottery equipment provider for $28.00, generating $262.52 million from the sale. 17,104 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 Scientific Games Corporation here.

P/E: N/A Forward P/E: 80.39 Industry P/E: N/A
P/S: 1.05 Price/Book: N/A EV/EBITDA: 13.33
Market Cap: $3.12B Avg. Daily Volume: 1,762,279 52 Week Range: $3.76 – $33.86

2. Guardant Health, Inc. (GH): $102.5

Shares of this oncology company were sold by 2 insiders:

  • Chief Executive Officer Helmy Eltoukhy sold 534,578 shares for $102.49, generating $54.79 million from the sale. 111,370 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Director Stanley J. Meresman sold 5,000 shares for $94.22, generating $471,100 from the sale. 5,000 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 Guardant Health, Inc. here.

P/E: N/A Forward P/E: -82.66 Industry P/E: 19.87
P/S: 39.56 Price/Book: 9.13 EV/EBITDA: -72.84
Market Cap: $10.19B Avg. Daily Volume: 842,631 52 Week Range: $55.9 – $105

3. Antero Midstream Corporation (AM): $5.4

Chief Executive Officer Paul M. Rady sold 8,600,000 shares of this oil & gas midstream company for $5.40, generating $46.44 million from the sale.

You can view the list of recent insider transactions for Antero Midstream Corporation here.

P/E: N/A Forward P/E: 5.93 Industry P/E: N/A
P/S: 2.5 Price/Book: 1.02 EV/EBITDA: 8.08
Market Cap: $2.57B Avg. Daily Volume: 5,315,804 52 Week Range: $1.69 – $8.45

4. The Boston Beer Company, Inc. (SAM): $877.36

Shares of this beverage company were sold by 3 insiders:

  • Chairman James C. Koch sold 23,490 shares for $850.20, generating $19.97 million from the sale. These shares were sold indirectly by a foundation managed by the reporting person.
  • Chief Financial Officer Frank H. Smalla sold 6,309 shares for $848.56, generating $5.35 million from the sale. These shares were sold as a result of exercising options immediately prior the sale.
  • Director Cynthia A. Fisher sold 3,490 shares for $868.50, generating $3.03 million from the sale. These shares were sold indirectly by a foundation managed by the reporting person.

You can view the list of recent insider transactions for The Boston Beer Company, Inc. here.

P/E: 78.71 Forward P/E: 51.19 Industry P/E: 37.76
P/S: 7.32 Price/Book: 12.75 EV/EBITDA: 40.57
Market Cap: $10.71B Avg. Daily Volume: 166,746 52 Week Range: $290.02 – $897.5

5. Zscaler, Inc. (ZS): $129.1

Shares of this software infrastructure company were sold by 6 insiders:

  • Chief Financial Officer Remo Canessa sold 95,835 shares for $128.39, generating $12.3 million from the sale.
  • President, CEO & Chairman Jagtar Singh Chaudhry sold 66,372 shares for $131.72, generating $8.74 million from the sale.
  • President Go-To-Mkt/ Chief Revenue Officer Dali Rajic sold 29,662 shares for $131.72, generating $3.91 million from the sale.
  • President of R&D and CTO Amit Sinha sold 21,962 shares for $132.28, generating $2.91 million from the sale. These shares were sold indirectly by a trust.
  • Chief Legal Officer Robert Schlossman sold 1,953 shares for $129.09, generating $252,113 from the sale.
  • Director Karen Blasing sold 1,042 shares for $130.37, generating $135,844 from the sale.

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

P/E: N/A Forward P/E: 243.59 Industry P/E: 55.31
P/S: 39.07 Price/Book: 35.06 EV/EBITDA: -223.13
Market Cap: $16.85B Avg. Daily Volume: 2,772,028 52 Week Range: $35 – $163.8

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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