Insider Weekends: Cluster Of Insider Purchases By Directors Of IBM

Welcome to edition 540 of Insider Weekends. Insider buying more than doubled last week with insiders purchasing $132.96 million of stock compared to $53.28 million in the week prior. Selling also increased with insiders selling $1.17 billion of stock last week compared to $884.13 million in the week prior.

We are currently working on the November 2020 newsletter for premium subscribers that it due out later today and hence I am going to keep this insider weekends post short on commentary.

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 8.82. In other words, insiders sold almost 9 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 16.59.

Insider Sector Heat Map October 30, 2020

Insider Sector Heat Map October 30, 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. Live Oak Bancshares, Inc. (LOB): $37.28

Chief Executive Officer James S. Mahan acquired 154,384 shares of this regional bank, paying $34.18 per share for a total amount of $5.28 million. These shares were purchased indirectly through a trust.

A lot of investors have been wary of banks and especially regional banks in this low interest rate environment because it can hurt their net interest margin. The net interest margin (NIM) is the spread between the interest banks pay their depositors and the interest the banks collect on their loans. The reality it turns out has been different thanks to the double tail winds of potentially forgivable Paycheck Protection Program (PPP) loans and increased mortgage activity due to low mortgage rates. For some banks, both of these are generating significantly more fee income than is lost from the compression in NIM.

Insiders of Live Oak Bancshares have been active buyers of shares most of this year with seven different insiders buying shares. The stock is up not just from the March lows but is up more than 100% over the last year. We also saw insider buying in other regional banks like Ohio based Premier Financial (PFS) that we tweeted about last week.

Premier Financial Insider Purchase

Premier Financial Insider Purchase

You can view the list of recent insider transactions for Live Oak Bancshares, Inc. here.

P/E: 41.42 Forward P/E: 17.58 Industry P/E: 12.59
P/S: 6.6 Price/Book: 2.59 EV/EBITDA: N/A
Market Cap: $1.51B Avg. Daily Volume: 273,630 52 Week Range: $7.57 – $37.9

2. Raytheon Technologies Corporation (RTX): $54.32

Shares of this aerospace & defense company were acquired by 5 insiders:

  • President and CEO Gregory Hayes acquired 55,000 shares, paying $54.82 per share for a total amount of $3.01 million. Mr. Hayes increased his stake by 27.45% to 255,365 shares with this purchase.
  • Executive Chairman Thomas A. Kennedy acquired 19,059 shares, paying $52.47 per share for a total amount of $1 million. Mr. Kennedy increased his stake by 5.55% to 362,541 shares with this purchase.
  • Director Dinesh C. Paliwal acquired 9,532 shares, paying $52.41 per share for a total amount of $499,546. Mr. Paliwal increased his stake by 91.52% to 19,947 shares with this purchase.
  • EVP and General Counsel Frank R. Jimenez acquired 1,000 shares, paying $52.57 per share for a total amount of $52,570. Mr. Jimenez increased his stake by 1.66% to 61,113 shares with this purchase.
  • Director James A. Winnefeld acquired 500 shares, paying $55.20 per share for a total amount of $27,600. Mr. Winnefeld increased his stake by 6.79% to 7,860 shares with this purchase.

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

P/E: N/A Forward P/E: N/A Industry P/E: 60.93
P/S: 0.99 Price/Book: N/A EV/EBITDA: 8.59
Market Cap: $82.5B Avg. Daily Volume: 8,362,776 52 Week Range: $43.4361 – $2398.85

3. International Business Machines Corporation (IBM): $111.66

Shares of IBM were acquired by 4 insiders:

  • Director Frederick William McNabb acquired 9,250 shares, paying $108.01 per share for a total amount of $999,125.
  • Director Sidney Taurel acquired 5,000 shares, paying $110.75 per share for a total amount of $553,725. Mr. Taurel increased his stake by 21.01% to 28,798 shares with this purchase.
  • Director David N. Farr acquired 1,500 shares, paying $107.74 per share for a total amount of $161,609. Mr. Farr increased his stake by 26.99% to 7,058 shares with this purchase. 450 of these shares were purchased indirectly by Mr. Farr’s spouse.
  • Director Frederick H. Waddell acquired 1,000 shares, paying $107.50 per share for a total amount of $107,496. These shares were purchased indirectly through a trust.

This is the first group of insider purchases since November 2018 when IBM’s former CEO Ginni Rometty and some of these same directors purchased shares. In his first six months at the helm of IBM, new CEO Arvind Krishna has not pulled off the kind of miracle Satya Nadella has performed at Microsoft but these are still early days for his stewardship of IBM.

You can view the list of recent insider transactions for International Business Machines Corporation here.

P/E: 12.66 Forward P/E: 9.58 Industry P/E: 54.00
P/S: 1.33 Price/Book: 4.69 EV/EBITDA: 9.69
Market Cap: $99.5B Avg. Daily Volume: 4,968,747 52 Week Range: $90.56 – $158.75

4. Crown Castle International Corp. (REIT) (CCI): $156.2

Director Landis J. Martin acquired 8,050 shares of this cell towers operator, paying $161.19 per share for a total amount of $1.29 million. Mr. Martin increased his stake by 6.12% to 139,543 shares with this purchase. 1,800 of these shares were purchased indirectly through various trusts.

You can view the list of recent insider transactions for Crown Castle International Corp. (REIT) here.

P/E: 97.63 Forward P/E: 65.63 Industry P/E: 45.51
P/S: 11.66 Price/Book: 7.09 EV/EBITDA: 29.57
Market Cap: $67.32B Avg. Daily Volume: 1,775,393 52 Week Range: $114.18 – $180

5. Agree Realty Corporation (ADC): $62.07

President & CEO Joey Agree acquired 15,293 shares of this retail REIT, paying $65.69 per share for a total amount of $1 million. Mr. Agree increased his stake by 4.10% to 388,520 shares with this purchase.

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

P/E: 33.75 Forward P/E: 35.67 Industry P/E: 45.51
P/S: 14.99 Price/Book: 1.51 EV/EBITDA: 23.58
Market Cap: $3.44B Avg. Daily Volume: 413,169 52 Week Range: $45.23 – $80.51

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

Notable Insider Sales:

1. Align Technology, Inc. (ALGN): $426.08

Shares of this medical device company were sold by 8 insiders:

  • President and CEO Joseph M. Hogan sold 80,000 shares for $457.41, generating $36.59 million from the sale.
  • Director George J. Morrow sold 20,000 shares for $466.05, generating $9.32 million from the sale.
  • SVP, Global Operations Emory Wright sold 16,016 shares for $452.83, generating $7.25 million from the sale. These shares were sold indirectly by various trusts.
  • Director Thomas M. Prescott sold 15,000 shares for $464.36, generating $6.97 million from the sale.
  • Director Warren S. Thaler sold 5,000 shares for $464.04, generating $2.32 million from the sale.
  • Director Greg J. Santora sold 4,000 shares for $457.75, generating $1.83 million from the sale. These shares were sold indirectly through a trust.
  • Chief Financial Officer John Morici sold 3,807 shares for $466.34, generating $1.78 million from the sale.
  • SVP & Manading Director Customer Service Jennifer Olson sold 2,100 shares for $465.00, generating $976,500 from the sale.

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

P/E: 19.39 Forward P/E: 50.97 Industry P/E: 59.25
P/S: 14.68 Price/Book: 11.07 EV/EBITDA: 76.44
Market Cap: $33.57B Avg. Daily Volume: 739,193 52 Week Range: $127.88 – $475.37

2. UnitedHealth Group Incorporated (UNH): $305.14

Director Stephen J. Hemsley sold 98,579 shares of this diversified health care company for $329.47, generating $32.48 million from the sale.

You can view the list of recent insider transactions for UnitedHealth Group Incorporated here.

P/E: 17.53 Forward P/E: 16.64 Industry P/E: 19.32
P/S: 1.15 Price/Book: 4.31 EV/EBITDA: 12.18
Market Cap: $289.99B Avg. Daily Volume: 2,746,583 52 Week Range: $187.72 – $335.65

3. salesforce.com, inc. (CRM): $232.27

Shares of this software application company were sold by 4 insiders:

  • Chairman of the Board & CEO Marc Benioff sold 90,000 shares for $241.96, generating $21.78 million from the sale.
  • Co-Founder and CTO Parker Harris sold 5,000 shares for $249.44, generating $1.25 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • President/Chief People Officer Brent Hyder sold 3,661 shares for $246.99, generating $904,233 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • President/Chief Engineering Officer Srinivas Tallapragada sold 335 shares for $248.47, generating $83,238 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 salesforce.com, inc. here.

P/E: 89.64 Forward P/E: 61.61 Industry P/E: 53.27
P/S: 10.91 Price/Book: 5.49 EV/EBITDA: 99.51
Market Cap: $211.37B Avg. Daily Volume: 7,603,253 52 Week Range: $115.29 – $284.5

4. Guardant Health, Inc. (GH): $106.66

Shares of this precision oncology company were sold by 2 insiders:

  • Chairman, President and COO Amirali Talasaz sold 93,600 shares for $106.79, generating $9.99 million from the sale. These shares were sold indirectly by Talasaz Investments, L.P.
  • Director Ian T. Clark sold 538 shares for $104.03, generating $55,968 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 Guardant Health, Inc. here.

P/E: N/A Forward P/E: -86.72 Industry P/E: 19.32
P/S: 41.25 Price/Book: 9.5 EV/EBITDA: -84.55
Market Cap: $10.63B Avg. Daily Volume: 947,569 52 Week Range: $55.9 – $114.33

5. The Coca-Cola Company (KO): $48.06

Director David B. Weinberg sold 200,000 shares of The Coca-Cola Company for $50.12, generating $10.02 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for The Coca-Cola Company here.

P/E: 24.9 Forward P/E: 22.78 Industry P/E: 33.62
P/S: 6.17 Price/Book: 11.1 EV/EBITDA: 21.21
Market Cap: $206.53B Avg. Daily Volume: 13,859,575 52 Week Range: $36.27 – $60.13

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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