Welcome to edition 544 of Insider Weekends. Insider buying increased last week with insiders purchasing $84.63 million of stock compared to $49.91 million in the week prior. Selling declined with insiders selling $2.56 billion of stock last week compared to $3.08 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 30.25. In other words, insiders sold more than 30 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 61.7.
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. Coty Inc. (COTY): $6.89
Shares of this beauty products manufacturer were acquired by 4 insiders:
- Director Johannes P. Huth acquired 1,000,000 shares, paying $6.20 per share for a total amount of $6.19 million. These shares were purchased indirectly through a trust.
- Director Olivier Goudet acquired 50,000 shares, paying $7.10 per share for a total amount of $355,175. Mr. Goudet increased his stake by 11.65% to 479,129 shares with this purchase.
- Director Robert S. Singer acquired 37,500 shares, paying $6.70 per share for a total amount of $251,374. Mr. Singer increased his stake by 11.72% to 357,482 shares with this purchase.
- Director Isabelle Parize acquired 10,000 shares, paying $6.13 per share for a total amount of $61,300.
The insiders of Coty have been infamous for continuously buying shares even as the company delivered lousy performance and the stock declined from a high of over $32 in June 2015 to a low of $2.65 two months ago. This extreme drop was precipitated in part by revenue declining from $7.65 billion in fiscal 2017 (ended June 2017) to $4.72 billion in fiscal 2020. During this time net debt ballooned to $8.61 billion (March 2020) before settling down to $8.18 billion last quarter. Net income was negative in 8 out of the last 10 quarters.
These insider purchases however caught my eye because they were occurring even as the stock more than doubled off the September lows and a potential turnaround seems to be afoot. Investors were particularly pleased by results last quarter when the company finally managed to report positive earnings of 24 cents per share, paid down debt and more importantly announced that the divestiture of its Professional and Retail hair business, which includes brands like Wella Professional and Clairol, was expected to close by the end of calendar 2020. Coty is spinning off this division in a $4.3 billion deal to the private equity firm KKR. The deal not only provides Coty with $2.5 billion in net cash proceeds to pay down debt, the company also gets to retain a 40% stake in this spinoff.
The company also has a new leader at the helm with Sue Y. Nabi taking on the role of CEO in September. Ms. Nabi was the CEO of L’Oréal Paris and served as Worldwide President of both L’Oréal, and Lancôme during her 20-year tenure at L’Oréal. Before joining Coty, she had launched a luxury skincare brand called Orveda. With Coty acquiring a 20% stake in Kim Kardashian West’s beauty products company, a 51% stake in Kylie Jenner’s makeup company and hiring an entrepreneur minded CEO, the silver lining of a transformation appears to be stoking investor and insider enthusiasm for the company.
You can view the list of recent insider transactions for Coty Inc. here.
|P/E: N/A||Forward P/E: 21.53||Industry P/E: 48.82|
|P/S: 1.19||Price/Book: 1.65||EV/EBITDA: 62.19|
|Market Cap: $5.28B||Avg. Daily Volume: 16,552,201||52 Week Range: $2.65 – $13.01|
2. Danaher Corporation (DHR): $216.78
Chairman of Executive Committee Mitchell P. Rales acquired 26,784 shares of this industrial, medical and commercial products company, paying $226.14 per share for a total amount of $6.06 million. Mr. Rales increased his stake by 1.13% to 2,404,658 shares with this purchase.
Mr. Rales along with his brother Steven M. Rales cofounded Danaher and has been on the Board of Directors since 1983. What started as a REIT in 1969 eventually transformed into a manufacturing and industrial company and over time the company has organized itself into three segments consisting of Life Sciences, Environmental & Applied Solutions and Diagnostics. In the words of the company’s CEO Rainer M. Blair when reporting third quarter 2020 results,
“We delivered outstanding third quarter results, achieving double-digit revenue growth, over 60% adjusted EPS growth, and we more than doubled our free cash flow year-over-year. Since the onset of the COVID-19 pandemic, our team has turned unprecedented challenges into impactful opportunities to support our customers and the global community, and we’re proud to play a pivotal role in tackling COVID-19 head-on.”
The pandemic has helped two out of their three divisions do very well and I can see why Mr. Rales has significantly stepped up his insider purchases since May of this year. I tweeted the following last week about his insider purchase.
You can view the list of recent insider transactions for Danaher Corporation here.
|P/E: 43.71||Forward P/E: 30.28||Industry P/E: 63.01|
|P/S: 7.55||Price/Book: 4.44||EV/EBITDA: 31.09|
|Market Cap: $154B||Avg. Daily Volume: 2,411,212||52 Week Range: $119.6 – $248.32|
3. Urban One, Inc. (UONE): $5.37
CEO Alfred C. Liggins acquired 719,143 shares of this multi-media and radio broadcasting company, paying $1.26 per share for a total amount of $904,585. Mr. Liggins increased his stake by 4.98% to 15,162,758 shares with this purchase.
Mr. Liggins purchase was of class D common shares (UONEK) which trade well below the class A shares. Class A shares have voting rights and can covert 1:1 into class D shares, which have no voting rights and cannot convert into class A shares. I have never seen such a huge divergence in price between two classes of shares that have the same ownership stake in the company.
You can view the list of recent insider transactions for here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 50.46|
|P/S: 0.17||Price/Book: 1.60||EV/EBITDA: 12.31|
|Market Cap: $107.85||Avg. Daily Volume: 2,053,301||52 Week Range: $0.95 – $54.16|
4. Alaska Communications Systems Group, Inc. (ALSK): $3.14
Former Director Brian A. Ross acquired 160,284 shares of this broadband telecommunication provider, paying $3.09 per share for a total amount of $496,770.
You can view the list of recent insider transactions for Alaska Communications Systems Group, Inc. here.
|P/E: 17.44||Forward P/E: 28.55||Industry P/E: 18.14|
|P/S: 0.71||Price/Book: 0.97||EV/EBITDA: 5.87|
|Market Cap: $169M||Avg. Daily Volume: 579,464||52 Week Range: $1.44 – $3.2|
5. CASI Pharmaceuticals, Inc. (CASI): $2.42
Chairman and CEO Wei-Wu He acquired 227,471 shares of this biotech company, paying $2.15 per share for a total amount of $488,239. Mr. He increased his stake by 4.70% to 5,063,994 shares with this purchase.
You can view the list of recent insider transactions for CASI Pharmaceuticals, Inc. here.
|P/E: N/A||Forward P/E: -10.52||Industry P/E: N/A|
|P/S: 25.72||Price/Book: 3.28||EV/EBITDA: -8.22|
|Market Cap: $299.94M||Avg. Daily Volume: 409,720||52 Week Range: $1.15 – $3.32|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Berkeley Lights, Inc. (BLI): $81.94
Shares of this biotech company were sold by 2 insiders:
- Director Igor Y. Khandros sold 1,049,696 shares for $82.56, generating $86.66 million from the sale. These shares were sold indirectly through a trust.
- Director Michael E. Marks sold 362,586 shares for $82.56, generating $29.94 million from the sale. These shares were sold indirectly by Walden Riverwood Ventures.
You can view the list of recent insider transactions for Berkeley Lights, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 40.87|
|P/S: 89.13||Price/Book: N/A||EV/EBITDA: -180.42|
|Market Cap: $5.27B||Avg. Daily Volume: 191,756||52 Week Range: $50.26 – $98.93|
2. Facebook, Inc. (FB): $277.81
Shares of Facebook were sold by 2 insiders:
- COB and CEO Mark Zuckerberg sold 211,500 shares for $271.42, generating $57.41 million from the sale. These shares were sold indirectly through a trust.
- VP and General Counsel Jennifer Newstead sold 310 shares for $268.20, generating $83,142 from the sale.
You can view the list of recent insider transactions for Facebook, Inc. here.
|P/E: 31.65||Forward P/E: 26.66||Industry P/E: 42.36|
|P/S: 10.02||Price/Book: 6.73||EV/EBITDA: 24.71|
|Market Cap: $791.28B||Avg. Daily Volume: 20,747,256||52 Week Range: $137.1 – $304.67|
3. The Carlyle Group Inc. (CG): $28.63
Founder and Co-Executive Chairman David M. Rubenstein sold 2,000,000 shares of this asset management company for $27.30, generating $54.59 million from the sale.
You can view the list of recent insider transactions for The Carlyle Group Inc. here.
|P/E: N/A||Forward P/E: 13.38||Industry P/E: 20.43|
|P/S: 5.38||Price/Book: 4.57||EV/EBITDA: 91.7|
|Market Cap: $10.12B||Avg. Daily Volume: 1,026,470||52 Week Range: $15.21 – $34.98|
4. Walmart Inc. (WMT): $151.6
Director S Robson Walton sold 260,000 shares of Walmart for $150.41, generating $39.11 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Walmart Inc. here.
|P/E: 21.88||Forward P/E: 26.32||Industry P/E: 23.41|
|P/S: 0.78||Price/Book: 5.27||EV/EBITDA: 14.02|
|Market Cap: $429.6B||Avg. Daily Volume: 8,769,146||52 Week Range: $102 – $153.4|
5. Southern Copper Corporation (SCCO): $60.85
Shares of this copper company were sold by 2 insiders:
- Chairman of the Board German Larrea Velasco sold 500,001 shares for $58.58, generating $29.29 million from the sale.
- Director Bonilla Luis Palomino sold 400 shares for $59.61, generating $23,844 from the sale.
You can view the list of recent insider transactions for Southern Copper Corporation here.
|P/E: 36.59||Forward P/E: 24.74||Industry P/E: 51.19|
|P/S: 6.28||Price/Book: 6.7||EV/EBITDA: 15.11|
|Market Cap: $47.04B||Avg. Daily Volume: 849,221||52 Week Range: $23.43 – $61.28|
You can view the full list of sales from this Insider Sales page.