Insider Weekends: Insider Selling Tops $4 Billion Third Week In A Row

Welcome to edition 559 of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $64.69 million of stock purchased compared to $231.56 million in the week prior. Selling decreased with insiders selling $4.4 billion of stock last week compared to $4.65 billion in the week prior.

In over ten years of tracking insider data, instances where insiders have sold more than $4 billion of stock in a single week have been rare. We did see this happen in November 2013 and May 2017 but we have never seen selling exceed the $4 billion level for three weeks in a row. When the gaming and social media platform Roblox (RBLX) went public last week through a direct listing, insiders chose to sell $391 million worth of stock in the IPO. Several members of the Roblox management team sold shares including a $84 million sale by the CEO and a $77.4 million sale by the CFO. Insiders that were buying hand over fist last March have changed their tune and are selling heavily now.

This is happening at a time when we saw 250 SPAC IPOs filed since the start of this year and compares with just 11 SPAC IPOs during the same in Q1 2020. We also saw Bitcoin eclipse $60,000 this weekend. I am by no means a perma-bear and am net long the market but have reduced my exposure in recent weeks. This latest stimulus fueled leg of the market provides a good opportunity to adjust risk and make the changes needed before the exit becomes crowded.

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 68.04. In other words, insiders sold more than 68 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at an unusually high 20.09.

Insider Sector Heat Map March 12, 2021

Insider Sector Heat Map March 12, 2021 (30 days of management purchases)

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. News Corporation (NWS): $24.93

Executive Chairman Keith Rupert Murdoch acquired 500,000 shares of this media and information services company, paying $24.09 per share for a total amount of $12.04 million. These shares were purchased indirectly through 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: 41.28
P/S: 1.75 Price/Book: 1.81 EV/EBITDA: 17.06
Market Cap: $15.23B Avg. Daily Volume: 841,127 52 Week Range: $7.88 – $25.03

2. Morphic Holding, Inc. (MORF): $69.09

Shares of this biopharmaceutical company were acquired by 3 insiders:

  • Director Timothy A. Springer acquired 100,000 shares, paying $70.00 per share for a total amount of $7 million. These shares were purchased indirectly by TAS Partners LLC.
  • CFO and COO Marc Schegerin acquired 3,000 shares, paying $63.50 per share for a total amount of $190,514. Mr. Schegerin increased his stake by 88.78% to 6,379 shares with this purchase.
  • Director Vikas Goyal acquired 1,000 shares, paying $70.00 per share for a total amount of $70,000.

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

P/E: N/A Forward P/E: -28.09 Industry P/E: N/A
P/S: 55.26 Price/Book: 15.24 EV/EBITDA: -40.86
Market Cap: $2.48B Avg. Daily Volume: 419,680 52 Week Range: $9.9 – $93

3. Dropbox, Inc. (DBX): $27.06

Director Robert J. Mylod Jr. acquired 100,000 shares of Dropbox, paying $24.59 per share for a total amount of $2.46 million. These shares were purchased indirectly by Annox Capital, LLC.

Mr. Mylod was the CFO of Booking Holdings (BKNG) from 2000 to 2011 back when it was still called Priceline. He is also on the Board of Directors of Redfin since 2014 and served as Redfin’s Chairman from August 2016 to June 2020. He joined Dropbox’s board in the same year he joined Redfin’s board in 2014.

Looking through his history of insider purchases and sales at Dropbox, it was interesting to see that he was selling Dropbox in 2018 and 2019 at prices ranging from $22.53 to $26.18. When reviewing our list of stock buyback announcements a few days ago, I noticed that Dropbox announced a $1 billion buyback last month representing more than 10% of the market cap of the company at the time of the announcement. The stock has gone up a lot since then and it is encouraging to see Mr. Mylod buy shares despite the recent price appreciation.

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

P/E: N/A Forward P/E: 18.92 Industry P/E: 54.89
P/S: 5.86 Price/Book: 32.88 EV/EBITDA: 37.62
Market Cap: $11.22B Avg. Daily Volume: 8,327,842 52 Week Range: $14.8 – $27.38

4. Lions Gate Entertainment Corp. (LGF-B): $15.96

Director Gordon Crawford acquired 100,000 shares of Lions Gate Entertainment, paying $15.59 per share for a total amount of $1.56 million. Mr. Crawford increased his stake by 13.86% to 821,336 shares with this purchase.

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

P/E: N/A Forward P/E: -122.77 Industry P/E: N/A
P/S: 1.12 Price/Book: 1.28 EV/EBITDA: 14.00
Market Cap: $3.75B Avg. Daily Volume: 870,127 52 Week Range: $3.87 – $16.09

5. OPKO Health, Inc. (OPK): $4.44

CEO & Chairman Phillip Frost M.D. acquired 300,000 shares of this medical devices and drug development  company, paying $3.91 per share for a total amount of $1.17 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: 92.5 Forward P/E: 49.33 Industry P/E: N/A
P/S: 2.07 Price/Book: 1.78 EV/EBITDA: 22.99
Market Cap: $2.97B Avg. Daily Volume: 8,259,868 52 Week Range: $1.12 – $6.47

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

Notable Insider Sales:

1. Snowflake Inc. (SNOW): $230

Shares of this cloud-based data platform provider were sold by 5 insiders:

  • Director Michael L. Speiser sold 650,000 shares for $219.00, generating $142.35 million from the sale. These shares were sold indirectly by a trust.
  • Director Jeremy Burton sold 122,000 shares for $237.02, generating $28.92 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Mark Garrett sold 47,186 shares for $250.00, generating $11.79 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Revenue Officer Christopher William Degnan sold 25,563 shares for $229.07, generating $5.86 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Financial Officer Michael Scarpelli sold 15,000 shares for $229.32, generating $3.44 million 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 Snowflake Inc. here.

P/E: N/A Forward P/E: -370.97 Industry P/E: 65.70
P/S: 85.56 Price/Book: 13.24 EV/EBITDA: -115.42
Market Cap: $50.65B Avg. Daily Volume: 4,866,860 52 Week Range: $208.55 – $429

2. The Carlyle Group Inc. (CG): $36.56

Director David M. Rubenstein sold 3,000,000 shares of this asset management company for $35.80, generating $107.39 million from the sale.

You can view the list of recent insider transactions for The Carlyle Group Inc. here.

P/E: 37.69 Forward P/E: 13.15 Industry P/E: 21.55
P/S: 4.41 Price/Book: 4.81 EV/EBITDA: 22.85
Market Cap: $12.95B Avg. Daily Volume: 1,503,654 52 Week Range: $15.21 – $37.81

3. Facebook, Inc. (FB): $268.4

COB and CEO Mark Zuckerberg sold 223,750 shares of Facebook for $262.16, generating $58.66 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: 26.6 Forward P/E: 19.82 Industry P/E: N/A
P/S: 8.89 Price/Book: 5.96 EV/EBITDA: 18.05
Market Cap: $764.31B Avg. Daily Volume: 19,624,532 52 Week Range: $137.1 – $304.67

4. WW International, Inc. (WW): $35.9

Shares of this weight management products and services provider were sold by 3 insiders:

  • Director Oprah Winfrey sold 850,648 shares for $35.59, generating $30.27 million from the sale. 232,976 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Accounting Officer Amy Kossover sold 3,336 shares for $34.29, generating $114,382 from the sale.
  • Chief Brand Officer Gail B. Tifford sold 2,757 shares for $33.97, generating $93,655 from the sale.

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

P/E: 33.55 Forward P/E: 16.32 Industry P/E: N/A
P/S: 1.8 Price/Book: N/A EV/EBITDA: 11.3
Market Cap: $2.48B Avg. Daily Volume: 2,200,296 52 Week Range: $9.75 – $36.9

5. Toll Brothers, Inc. (TOL): $55.5

Shares of this residential construction company were sold by 4 insiders:

  • Director Robert I. Toll sold 417,741 shares for $57.51, generating $24.02 million from the sale. 318,528 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Financial Officer Martin P. Connor sold 10,000 shares for $57.75, generating $577,500 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Executive Officer Douglas C. Yearley Jr. sold 10,000 shares for $59.00, generating $590,008 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Accounting Officer Michael J. Grubb sold 2,250 shares for $55.74, generating $125,415 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 Toll Brothers, Inc. here.

P/E: 14.64 Forward P/E: 8.26 Industry P/E: 15.87
P/S: 0.93 Price/Book: 1.43 EV/EBITDA: 12.99
Market Cap: $6.83B Avg. Daily Volume: 1,851,698 52 Week Range: $13.28 – $59.28

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 a long position in Lions Gate Entertainment. 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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