Insider Weekends: Content Is King

We have heard the phrase “content is king” over the years and while it had a nice ring to it, you rarely saw this reflected in valuations of private or public companies that were focused on the creation of content. This changed in the recent past. Long suffering companies that have a deep library of original content or that produce new original content on a consistent basis are finally being rewarded by investors. Cord cutting finally got baked into the investment thesis and these companies are now benefiting from all the new distribution channels that have cropped up.

I used the market dislocation last year to add to positions in content companies like Lions Gate Entertainment (LGF.A) or start new positions in companies like Discovery (DISCA). After a big run-up in Discovery on optimism around the launch of Discovery+, I exited the position but it was interesting to see that an insider was buying despite the near doubling of the stock price. John Malone was spot on with his insider purchase of Discovery in late 2019 when he felt that the stock was very cheap and we discussed that purchase in a post titled Insider Weekends: John Malone Purchases $75 Million Of Discovery. Over the course of the year after his purchase, the stock got significantly cheaper and it was possible to buy it in high teens or the low $20s.

Discovery Insider Purchase Tweet

Discovery Insider Purchase Tweet

We are now seeing insider buying in a plethora of other content focused companies including the documentary focused streaming company CuriosityStream (CURI) as well as the old guard like Fox and News Corp as discussed below.

Welcome to edition 560 of Insider Weekends. Insider buying increased last week with insiders purchasing $100.17 million of stock purchased compared to $64.69 million in the week prior. After three weeks of selling that topped the $4 billion mark, insider selling moderated a little with insiders selling $3.55 billion of stock last week compared to $4.4 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 35.42. In other words, insiders sold more than 35 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at an unusually high 68.04.

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. Fox Corporation (FOX): $40.35

Chairman Keith Rupert Murdoch acquired 500,000 shares of Fox Corporation, paying $42.77 per share for a total amount of $21.38 million. These shares were purchased indirectly by a trust.

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

P/E: 15.97 Forward P/E: 17.17 Industry P/E: 43.16
P/S: 1.95 Price/Book: 2.19 EV/EBITDA: 8.93
Market Cap: $24.69B Avg. Daily Volume: 1,722,754 52 Week Range: $19.13 – $42.14

2. News Corporation (NWS): $25.13

Executive Chairman Keith Rupert Murdoch acquired 500,000 shares of News Corporation, paying $26.05 per share for a total amount of $13.02 million. These shares were purchased indirectly by a trust.

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

P/E: N/A Forward P/E: N/A Industry P/E: 43.16
P/S: 1.8 Price/Book: 1.83 EV/EBITDA: 17.18
Market Cap: $15.69B Avg. Daily Volume: 824,377 52 Week Range: $7.88 – $25.64

3. HC2 Holdings, Inc. (HCHC): $4.06

Shares of this construction and engineering company were acquired by 2 insiders:

  • Director Avram A. Glazer acquired 2,164,108 shares, paying $3.80 per share for a total amount of $8.22 million. These shares were purchased indirectly by a trust.
  • President and CEO Wayne Barr Jr. acquired 7,500 shares, paying $3.66 per share for a total amount of $27,425. Mr. Barr increased his stake by 2.90% to 266,219 shares with this purchase.

You can view the list of recent insider transactions for HC2 Holdings, Inc. here.

P/E: N/A Forward P/E: -6.77 Industry P/E: 84.92
P/S: 0.31 Price/Book: 0.56 EV/EBITDA: 47
Market Cap: $311.62M Avg. Daily Volume: 662,909 52 Week Range: $1.29 – $4.75

4. GoHealth, Inc. (GOCO): $12

Shares of this health insurance marketplace and digital health company were acquired by 3 insiders:

  • Chief Executive Officer Clinton P. Jones acquired 178,000 shares, paying $11.38 per share for a total amount of $2.03 million. These shares were purchased indirectly by BCCJ, LLC.
  • Director Anita Pramoda acquired 10,370 shares, paying $9.99 per share for a total amount of $103,596. Ms. Pramoda increased her stake by 87.11% to 22,275 shares with this purchase.

These are the first insider purchases at GoHealth since its IPO at $21 per share in June 2020. The stock traded as high as $26.25 on its first day of trading before beginning a months long decline that saw the stock price cut in half during the next six months.

Based on a cursory look at the company and its fourth quarter 2020 earnings presentation, the company looks interesting and I look forward to digging into it more to see if it could become the spotlight idea for our April newsletter for premium subscribers. The eight spotlight ideas in our model portfolio have generated average gains of over 40% (not annualized).

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

P/E: N/A Forward P/E: N/A Industry P/E: 16.98
P/S: 4.39 Price/Book: N/A EV/EBITDA: 47.34
Market Cap: $3.85B Avg. Daily Volume: 1,765,344 52 Week Range: $9.82 – $26.25

5. Apartment Investment and Management Company (AIV): $5.54

Director Terry Considine acquired 300,000 shares of this apartment development company, paying $5.71 per share for a total amount of $1.71 million. These shares were purchased indirectly by a retirement plan.

AIMCO split into two companies last December when it spun off its apartments portfolio into a separate REIT called Apartment Income REIT Corp. (AIRC). The remaining AIMCO business is now focused on development and redevelopment. The move was opposed by the activist investor Jonathan Litt but the company proceeded with this split-off.

You can view the list of recent insider transactions for Apartment Investment and Management Company here.

P/E: N/A Forward P/E: 21.31 Industry P/E: 72.13
P/S: 5.43 Price/Book: 1.65 EV/EBITDA: 30.2
Market Cap: $826.61M Avg. Daily Volume: 5,683,178 52 Week Range: $3.2702 – $6.48

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

Notable Insider Sales:

1. Walmart Inc. (WMT): $131.74

Director Robson S. Walton sold 1,000,000 shares of Walmart for $131.92, generating $131.92 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: 27.73 Forward P/E: 22.44 Industry P/E: 27.11
P/S: 0.67 Price/Book: 4.58 EV/EBITDA: 12.44
Market Cap: $372.73B Avg. Daily Volume: 9,260,744 52 Week Range: $106.85 – $153.66

2. Facebook, Inc. (FB): $290.11

COB and CEO Mark Zuckerberg sold 255,004 shares of Facebook for $275.26, generating $70.19 million from the sale. These shares were sold indirectly by various entities.

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

P/E: 28.75 Forward P/E: 21.43 Industry P/E: 40.72
P/S: 9.61 Price/Book: 6.44 EV/EBITDA: 19.61
Market Cap: $826.14B Avg. Daily Volume: 840,950 52 Week Range: $25.17 – $212.40

3. Zillow Group, Inc. (ZG): $141.71

Chief Executive Officer Richard N. Barton sold 343,940 shares of this digital real estate company for $148.92, generating $51.22 million from the sale.

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

P/E: N/A Forward P/E: 102.69 Industry P/E: 40.72
P/S: 9.50 Price/Book: 7.19 EV/EBITDA: 243.52
Market Cap: $32.12B Avg. Daily Volume: 19,926,473 52 Week Range: $142.25 – $304.67

4. Workday, Inc. (WDAY): $251.23

Shares of this enterprise cloud applications provider were sold by 2 insiders:

  • Director David A. Duffield sold 108,900 shares for $257.43, generating $28.03 million from the sale. These shares were sold indirectly by the Dave and Cheryl Duffield Foundation.
  • Co-CEO Gomez Luciano Fernandez sold 7,344 shares for $253.68, generating $1.86 million from the sale.

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

P/E: N/A Forward P/E: 72.4 Industry P/E: 53.81
P/S: 14.13 Price/Book: 18.62 EV/EBITDA: 481.64
Market Cap: $61.02B Avg. Daily Volume: 2,077,700 52 Week Range: $115.5 – $282.77

5. Moelis & Company (MC): $56.58

Shares of this investment banking advisory firm were sold by 2 insiders:

  • Chairman, CEO Kenneth Moelis sold 300,000 shares for $56.82, generating $17.04 million from the sale. These shares were sold indirectly by a trust.
  • Chief Operating Officer Elizabeth Crain sold 20,075 shares for $56.83, generating $1.14 million from the sale.

You can view the list of recent insider transactions for Moelis & Company here.

P/E: 18.36 Forward P/E: 18.37 Industry P/E: 21.37
P/S: 3.48 Price/Book: 6.84 EV/EBITDA: N/A
Market Cap: $3.28B Avg. Daily Volume: 476,754 52 Week Range: $23.86 – $59.63

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: I hold long positions in Lions Gate Entertainment (LGF.A), Zillow (Z) and Workday (WDAY). 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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