Happy New Year and welcome to edition 549 of Insider Weekends. Insider buying decreased last week with insiders purchasing $92.47 million of stock compared to $111.67 million in the week prior. Selling also decreased with insiders selling $1.22 billion of stock last week compared to $1.69 billion in the week prior. I continue to remain surprised by this level of insider buying at a time when the market is near all time highs and insiders at most companies are entering their earnings related quiet periods. I wrote the following in our January Special Situations newsletter for premium subscribers last night:
The year that we just left behind defied all expectations in myriad ways. Western economies were not expecting nor were prepared for a global pandemic that came back even stronger in a second wave this Fall and Winter. Nor were we expecting the rapid pace of stimulus that left U.S. consumers with more than $1 trillion of disposable personal income as outlined in the NY Times article titled Why Markets Boomed in a Year of Human Misery. This stimulus combined with a rapidly expanding Fed balance sheet that jumped from $4.2 trillion to $7.4 trillion in a single year supercharged returns across asset classes with the S&P 500 returning 16.3% this year and the Nasdaq generating gains of 44%.
To say I am seeing signs of a bubble would be an understatement. The shoeshine boy examples are piling up but we have to be cognizant that this bubble can continue to inflate for some time to come, especially with the passage of the latest $900 billion stimulus package and a very accommodative Federal Reserve.
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 13.17. In other words, insiders sold more than 13 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 15.09.
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. IQVIA Holdings Inc. (IQV): $179.17
Director John G. Danhakl acquired 63,451 shares of this contract research organization, paying $176.95 per share for a total amount of $11.23 million. Mr. Danhakl gifted 100,000 shares to the Danhakl Family Foundation and then turned around and purchased 63,451 shares on the open market for a family trust.
Mr. Danhakl has served on the board of IQVIA Holdings since October 2016 and prior to that served on the board of IMS Health from February 2010 to October 2016. IMS Health merged with Quintiles Transnational Holdings in October 2016 and the combined company subsequently renamed itself IQVIA Holdings in November 2017.
The largest revenue source for the company is contract research services it provides to pharma and biotech companies. The company also provides technology and analytical services and this fast growing division with higher margins accounted for 43% of total revenue in Q3 2020. Mr. Danhakl is a Managing Partner at Leonard Green & Partners, the leading private equity firm with over $41 billion in assets under management.
The only other insider purchase we have seen at IQVIA Holdings over the last four years was a 10,000 share purchase by a Director in August 2020. The company took a small hit on account of COVID-19 in Q2 2020 with revenue declining 8% year-over-year before stabilizing in Q3 2020. Trading at 26 times trailing EBITDA, I am surprised Mr. Danhakl decided to buy shares at this juncture.
You can view the list of recent insider transactions for IQVIA Holdings Inc. here.
|P/E: 197.76||Forward P/E: 22.85||Industry P/E: 43.66|
|P/S: 3.14||Price/Book: 5.88||EV/EBITDA: 26.03|
|Market Cap: $34.35B||Avg. Daily Volume: 1,011,080||52 Week Range: $81.79 – $180.99|
2. Odonate Therapeutics, Inc. (ODT): $19.2
Shares of this biotech company were acquired by 3 insiders:
- Director Aaron I. Davis acquired 400,000 shares, paying $17.16 per share for a total amount of $6.86 million. These shares were purchased indirectly by Boxer Capital.
- Director Craig A. Johnson acquired 3,000 shares, paying $17.00 per share for a total amount of $51,000.
You can view the list of recent insider transactions for Odonate Therapeutics, Inc. here.
|P/E: N/A||Forward P/E: -5.73||Industry P/E: 41.37|
|P/S: N/A||Price/Book: 4.47||EV/EBITDA: -4.52|
|Market Cap: $740M||Avg. Daily Volume: 392,550||52 Week Range: $12.56 – $46.5|
3. Steel Partners Holdings L.P. (SPLP): $10.75
Shares of this industrial conglomerate were acquired by 3 insiders:
- Executive Chairman Warren G. Lichtenstein acquired 114,700 shares, paying $9.10 per share for a total amount of $1.04 million. These shares were purchased indirectly by Steel Partners, Ltd.
- President Jack L. Howard acquired 79,600 shares, paying $9.12 per share for a total amount of $725,928. Mr. Howard increased his stake by 4.85% to 1,719,178 shares with this purchase. 39,000 of these shares were purchased indirectly by various trusts and entities.
- Director Eric P. Karros acquired 21,695 shares, paying $9.17 per share for a total amount of $198,850. Mr. Karros increased his stake by 192.20% to 32,983 shares with this purchase.
You can view the list of recent insider transactions for Steel Partners Holdings L.P. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 25.46|
|P/S: 0.19||Price/Book: 0.58||EV/EBITDA: 17.01|
|Market Cap: $270.98M||Avg. Daily Volume: 75,266||52 Week Range: $4.31 – $11.99|
4. OPKO Health, Inc. (OPK): $3.95
CEO & Chairman Phillip Frost M.D. acquired 300,000 shares of this medical devices and drug development company, paying $4.00 per share for a total amount of $1.19 million. These shares were purchased indirectly by Frost Gamma Investments Trust.
You can view the list of recent insider transactions for OPKO Health, Inc. here.
|P/E: N/A||Forward P/E: 19.75||Industry P/E: N/A|
|P/S: 2.27||Price/Book: 1.63||EV/EBITDA: 44.42|
|Market Cap: $2.65B||Avg. Daily Volume: 8,997,417||52 Week Range: $1.12 – $6.47|
5. Fidelity National Financial, Inc. (FNF): $39.09
Director John D. Rood acquired 29,100 shares of this insurance company, paying $38.45 per share for a total amount of $1.12 million. Mr. Rood increased his stake by 19.10% to 181,434 shares with this purchase.
I’ve been looking into Fidelity National Financial for several weeks now and have been perplexed by how a company that is growing its top line double digits, consistently beats earnings expectations by a wide margin and sports an attractive dividend yield of 3.7% trades for just 7 times EBITDA. The only missing piece for me was a show of confidence by insiders through insider buying and we got that last week with this purchase. Mr. Rood has served on the company’s Board of Directors since 2013 and this is his second insider purchase this year. Oddly enough he is the only insider to have purchased shares on the open market in the last ten years.
I tweeted the following about the company last week,
You can view the list of recent insider transactions for Fidelity National Financial, Inc. here.
|P/E: 11.43||Forward P/E: 9.2||Industry P/E: 16.84|
|P/S: 1.22||Price/Book: 1.61||EV/EBITDA: 7.24|
|Market Cap: $11.48B||Avg. Daily Volume: 1,828,034||52 Week Range: $19 – $49.28|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Walmart Inc. (WMT): $144.15
Director Robson S. Walton sold 2,000,000 shares of Walmart for $144.27, generating $288.53 million from the sale. These shares were sold indirectly by a trust.
You can view the list of recent insider transactions for Walmart Inc. here.
|P/E: 20.8||Forward P/E: 25.07||Industry P/E: 22.45|
|P/S: 0.74||Price/Book: 5.01||EV/EBITDA: 12.33|
|Market Cap: $407.84B||Avg. Daily Volume: 6,712,314||52 Week Range: $102 – $153.66|
2. Elastic N.V. (ESTC): $146.13
Director Steven Schuurman sold 675,000 shares of this software application company for $144.69, generating $97.67 million from the sale. These shares were sold indirectly by by CMXI B.V.
You can view the list of recent insider transactions for Elastic N.V. here.
|P/E: N/A||Forward P/E: -286.53||Industry P/E: 59.26|
|P/S: 25.02||Price/Book: 28.79||EV/EBITDA: -108.15|
|Market Cap: $12.77B||Avg. Daily Volume: 904,974||52 Week Range: $39.01 – $159.95|
3. Facebook, Inc. (FB): $273.16
Shares of Facebook were sold by 2 insiders:
- COB and CEO Mark Zuckerberg sold 202,000 shares for $272.53, generating $55.05 million from the sale. These shares were sold indirectly by various entities.
- VP and General Counsel Jennifer Newstead sold 310 shares for $277.00, generating $85,870 from the sale.
You can view the list of recent insider transactions for Facebook, Inc. here.
|P/E: 31.12||Forward P/E: 26.04||Industry P/E: 39.66|
|P/S: 9.85||Price/Book: 6.61||EV/EBITDA: 24.27|
|Market Cap: $778.04B||Avg. Daily Volume: 18,330,465||52 Week Range: $137.1 – $304.67|
4. Enphase Energy, Inc. (ENPH): $175.47
Shares of this home energy solutions company were sold by 2 insiders:
- EVP & Chief Financial Officer Eric Branderiz sold 54,382 shares for $182.82, generating $9.94 million from the sale.
- President & CEO Badrinarayanan Kothandaraman sold 30,000 shares for $174.32, generating $5.23 million from the sale.
You can view the list of recent insider transactions for Enphase Energy, Inc. here.
|P/E: 136.66||Forward P/E: 94.85||Industry P/E: 33.94|
|P/S: 30.8||Price/Book: 53.24||EV/EBITDA: 131.8|
|Market Cap: $22.17B||Avg. Daily Volume: 3,322,069||52 Week Range: $21.49 – $189.41|
5. Marriott International, Inc. (MAR): $131.92
President & CEO Arne M. Sorenson sold 100,000 shares of Marriott International for $128.72, generating $12.87 million from the sale.
You can view the list of recent insider transactions for Marriott International, Inc. here.
|P/E: 245.2||Forward P/E: 53.84||Industry P/E: N/A|
|P/S: 14.29||Price/Book: 186.86||EV/EBITDA: 46.89|
|Market Cap: $42.79B||Avg. Daily Volume: 2,626,123||52 Week Range: $46.56 – $150.97|
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.