Insider Weekends: Sell/Buy Ratio Spikes Well Over 100

Welcome to edition 557 of Insider Weekends. In a tumultuous week that saw the S&P 500 pull back 2.45% and the Nasdaq drop 4.92%, insiders chose to hold their horses and not buy on the open market. Insider buying decreased significantly last week with insiders purchasing $32.72 million of stock purchased compared to $144.14 million in the week prior. Selling on the other hand increased significantly with insiders selling $4.82 billion of stock last week compared to $2.99 billion in the week prior.

What is remarkable about the action last week is that this happened at a time when most insiders were not constrained from buying due to earnings related “quiet periods”. Markets were clearly spooked by the rise in U.S. treasury yields despite favorable language from Jay Powell that we are a long way from the Federal Reserve’s employment and inflation targets. The last bastion fortifying extreme valuations started unraveling last week with this rise in both U.S. treasury and mortgage rates. Oddly enough we saw a lot of insider buying in two groups, including  regional banks and REITs. While one group will benefit from rising rates, the other would be hurt by them.

30 Year Fixed Rate Mortgage Average

30 Year Fixed Rate Mortgage Average (Source: PowerCompounding.com)

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 went up to 147.22. In other words, insiders sold more than 147 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 20.75.

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. American Assets Trust, Inc. (AAT): $31.08

Chairman, CEO & President Ernest S. Rady acquired 117,998 shares of this diversified REIT, paying $29.50 per share for a total amount of $3.48 million. These shares were purchased indirectly by American Assets, Inc.

We wrote the following about Mr. Rady’s purchases in November. The stock is up more than 48% since then.

Mr. Rady has been an active buyer of American Assets Trust stock all of this year but significantly stepped up his purchases last week. American Assets Trust has a diversified portfolio mix of office, retail and multi-family properties. With the recent drop in the stock, the dividend yield is now up to 4.77% with a payout ratio of 50.71%. Unlike other retail REITs, AAT’s revenue and funds from operations (FFO) did not take a dramatic hit from the pandemic with revenue down just 2.4% in Q2 and down 14.22% in Q3 2020.

You can view the list of recent insider transactions for American Assets Trust, Inc. here.

P/E: 67.27 Forward P/E: 39.85 Industry P/E: 65.71
P/S: 5.49 Price/Book: 1.48 EV/EBITDA: 16.91
Market Cap: $1.88B Avg. Daily Volume: 272,056 52 Week Range: $20.15 – $43.65

2. OPKO Health, Inc. (OPK): $4.5

CEO & Chairman Phillip Frost M.D. acquired 500,000 shares of this medical devices and drug development  company, paying $4.77 per share for a total amount of $2.38 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: 93.75 Forward P/E: 50 Industry P/E: N/A
P/S: 2.1 Price/Book: 1.8 EV/EBITDA: 23.28
Market Cap: $3.02B Avg. Daily Volume: 8,632,220 52 Week Range: $1.12 – $6.47

3. Sonos, Inc. (SONO): $38.94

Director Michelangelo Volpi acquired 53,666 shares of this multi-room audio products designer, paying $37.35 per share for a total amount of $2 million. These shares were purchased indirectly through a trust.

Mike Volpi is a venture capitalist that helped found the San Francisco office of Index Ventures, a VC firm that raised $2 billion in new funds last April during the height of the pandemic. When looking at all the insider transactions at Sonos, it seemed odd that Mr. Volpi sold a large number of shares on Feb 12 to 17 only to turn around and buy some two days later. Looking through the filing it became clear that the sales were from one of Index Venture’s funds that was exiting its stake in Sonos while the purchases were direct open market purchases by Mr. Volpi’s family trust.

Sonos Insider Transactions

Sonos Insider Transactions

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

P/E: 107.87 Forward P/E: 40.14 Industry P/E: 15.41
P/S: 3.31 Price/Book: 9.09 EV/EBITDA: 40.26
Market Cap: $4.66B Avg. Daily Volume: 3,288,417 52 Week Range: $6.58 – $41.55

4. Franklin Street Properties Corp. (FSP): $4.96

Shares of this office REIT were acquired by 3 insiders:

  • Director Dennis J. McGillicuddy acquired 300,552 shares, paying $4.22 per share for a total amount of $1.27 million. These shares were purchased indirectly by McGillicuddy Investments Limited Partnership III.
  • Director Brian N. Hansen acquired 62,500 shares, paying $4.14 per share for a total amount of $258,919. Mr. Hansen increased his stake by 79.44% to 141,174 shares with this purchase.
  • Director Kenneth A. Hoxsie acquired 6,500 shares, paying $4.18 per share for a total amount of $27,169. Mr. Hoxsie increased his stake by 9.01% to 78,674 shares with this purchase.

You can view the list of recent insider transactions for Franklin Street Properties Corp. here.

P/E: 16.32 Forward P/E: N/A Industry P/E: 65.71
P/S: 2.17 Price/Book: 0.69 EV/EBITDA: 13.64
Market Cap: $532.35M Avg. Daily Volume: 494,943 52 Week Range: $3.34 – $7.64

5. Sensei Biotherapeutics, Inc. (SNSE): $16.5

Director James Peyer acquired 72,888 shares of this biotech company, paying $17.70 per share for a total amount of $1.29 million.

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

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: N/A Price/Book: N/A EV/EBITDA: -5.51
Market Cap: $504.71M Avg. Daily Volume: 575,487 52 Week Range: $15.45 – $26.5

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

Notable Insider Sales:

1. Walmart Inc. (WMT): $129.92

Director Robson S. Walton sold 1,000,000 shares of Walmart for $130.99, generating $130.99 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: 27.35 Forward P/E: 22.13 Industry P/E: 26.14
P/S: 0.66 Price/Book: 4.52 EV/EBITDA: 12.29
Market Cap: $367.58B Avg. Daily Volume: 8,386,151 52 Week Range: $102 – $153.66

2. Hess Corporation (HES): $65.53

Chief Executive Officer John B. Hess sold 1,150,000 shares of this integrated energy company for $68.05, generating $78.26 million from the sale. 922,784 of these shares were sold indirectly by a trust.

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

P/E: N/A Forward P/E: 52.42 Industry P/E: N/A
P/S: 4.43 Price/Book: 3.73 EV/EBITDA: 15.88
Market Cap: $20.12B Avg. Daily Volume: 2,126,854 52 Week Range: $26.06 – $70.5

3. Facebook, Inc. (FB): $257.62

Shares of Facebook were sold by 3 insiders:

  • COB and CEO Mark Zuckerberg sold 223,750 shares for $263.78, generating $59.02 million from the sale. These shares were sold indirectly by various entities.
  • Chief Financial Officer David M. Wehner sold 5,916 shares for $257.95, generating $1.53 million from the sale.
  • Chief Accounting Officer Susan J.S. Taylor sold 2,707 shares for $269.47, generating $729,455 from the sale.

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

P/E: 25.53 Forward P/E: 19.03 Industry P/E: 37.87
P/S: 8.53 Price/Book: 5.72 EV/EBITDA: 17.27
Market Cap: $733.62B Avg. Daily Volume: 18,685,751 52 Week Range: $137.1 – $304.67

4. Southern Copper Corporation (SCCO): $71.33

Shares of this copper company were sold by 2 insiders:

  • Chairman of the Board German Larrea Mota Velasco sold 521,708 shares for $76.40, generating $39.86 million from the sale.
  • Director Bonilla Luis Palomino sold 400 shares for $78.50, generating $31,400 from the sale.

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

P/E: 35.12 Forward P/E: 25.66 Industry P/E: 37.50
P/S: 6.91 Price/Book: 7.63 EV/EBITDA: 15.41
Market Cap: $55.14B Avg. Daily Volume: 986,612 52 Week Range: $23.43 – $83.15

5. Raymond James Financial, Inc. (RJF): $116.74

Shares of this investment brokerage were sold by 4 insiders:

  • Chairman Emeritus Thomas A. James sold 220,000 shares for $116.61, generating $25.65 million from the sale. These shares were sold indirectly through a trust.
  • Vice Chairman Francis S. Godbold sold 25,042 shares for $121.52, generating $3.04 million from the sale.
  • Chairman & CEO Paul C. Reilly sold 13,967 shares for $120.60, generating $1.68 million from the sale.
  • Chair, President & CEO RJ Ltd. Paul D. Allison sold 10,000 shares for $117.99, generating $1.18 million from the sale. These shares were sold indirectly by the reporting person’s spouse.

You can view the list of recent insider transactions for Raymond James Financial, Inc. here.

P/E: 18.94 Forward P/E: 13.98 Industry P/E: 20.36
P/S: 2.02 Price/Book: 2.18 EV/EBITDA: N/A
Market Cap: $16.08B Avg. Daily Volume: 792,096 52 Week Range: $54.21 – $124.02

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 and Plus 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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