Welcome to edition 568 of Insider Weekends. There were a string of interesting and large insider purchases last week following the broad-based decline in the market early in the week. A number of these purchases were repeat purchases by insiders that have purchased shares in the recent past including Farhad Nanji’s purchase of mortgage company PennyMac (PFSI) discussed below, Mark Klein’s purchase of SuRo Capital (SSSS) and Sardar Biglari’s purchases of Biglari Holdings (BH) through the Lion Fund.
Insider buying increased significantly last week with insiders purchasing $132.61 million of stock purchased compared to $46.32 million in the week prior. Selling remained unchanged at $3.07 billion.
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 23.18. In other words, insiders sold more than 23 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 66.28.
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. PennyMac Financial Services, Inc. (PFSI): $60.25
Director Farhad Nanji acquired 667,979 shares of this mortgage finance company, paying $57.88 per share for a total amount of $38.66 million. These shares were purchased indirectly by MFN Partners, LP.
This purchase by Mr. Nanji fascinates me because for all intents and purposes it is occurring at what most consider the cyclical peak for mortgage and housing related companies. With the 10 year treasury note trending up and mortgage rates following suit, investors are growing cautious of mortgage and housing related companies. Early data from the start of May indicated mortgage demand may have stalled. I have exposure to the housing sector through four different companies including a title insurance company, a flooring company, a mortgage company and a home builder. Companies generally tend to look their cheapest at a cyclical peak and can turn into value traps. This is why PennyMac is selling for less than 3 times trailing earnings. Yes, you read that right, it is trading at a P/E below 3. The average estimate of 2021 earnings across seven analysts is $16.39, putting the forward P/E at less than 4. In other words the market does not expect these housing related tailwinds to last long.
Mr. Nanji clearly has a divergent view and has been a big buyer of the stock as we outlined in our March 28 insider weekends post following a $55 million purchase by him. We wrote the following about his purchase then,
A big part of the insider buying was driving by IPO related buying in three companies and a long-term director of mortgage lender PennyMac Financial Services (PFSI), Farhad Nanji, buying nearly $55 million worth of stock through his investment firm MFN Partners Management. The firm is a Harvard backed investment management company with a value oriented focus and over $2 billion in AUM.
Despite the big earnings bonanza, the company has been cautious about returning capital to shareholders and has not declared any special dividends yet. It bumped up its regular dividend from 15 cents a share to 20 cents a share a couple of quarters ago, putting the current yield at a little north of 1%.
You can view the list of recent insider transactions for PennyMac Financial Services, Inc. here.
|P/E: 2.68||Forward P/E: 5.47||Industry P/E: 10.79|
|P/S: 0.97||Price/Book: 1.16||EV/EBITDA: N/A|
|Market Cap: $4.02B||Avg. Daily Volume: 894,860||52 Week Range: $28.52 – $70.99|
2. Avis Budget Group, Inc. (CAR): $86.83
Executive Chairman Bernardo Hees acquired 63,000 shares of this car and truck rentals provider, paying $79.39 per share for a total amount of $5 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Avis Budget Group, Inc. here.
|P/E: N/A||Forward P/E: 16.96||Industry P/E: 52.95|
|P/S: 1.21||Price/Book: N/A||EV/EBITDA: 136.23|
|Market Cap: $6.07B||Avg. Daily Volume: 1,616,749||52 Week Range: $12.86 – $90.29|
3. Activision Blizzard, Inc. (ATVI): $93.35
Director Peter J. Nolan acquired 22,000 shares of this video game software company, paying $94.96 per share for a total amount of $2.09 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Activision Blizzard, Inc. here.
|P/E: 31.54||Forward P/E: 20.98||Industry P/E: N/A|
|P/S: 8.46||Price/Book: 4.73||EV/EBITDA: 20.91|
|Market Cap: $72.53B||Avg. Daily Volume: 5,963,812||52 Week Range: $66.59 – $104.53|
4. Vistra Corp. (VST): $16.38
Shares of this electricity and natural gas retailer were acquired by 4 insiders:
- CEO Curtis A. Morgan acquired 61,730 shares, paying $15.89 per share for a total amount of $980,581. Mr. Morgan increased his stake by 8.88% to 757,157 shares with this purchase.
- Director John R. Sult acquired 15,830 shares, paying $15.80 per share for a total amount of $250,051. Mr. Sult increased his stake by 23.05% to 84,499 shares with this purchase.
- Director Scott B. Helm acquired 10,000 shares, paying $15.68 per share for a total amount of $156,800. Mr. Helm increased his stake by 4.27% to 244,010 shares with this purchase.
- Director Brian K. Ferraioli acquired 4,000 shares, paying $15.72 per share for a total amount of $62,891.
You can view the list of recent insider transactions for Vistra Corp. here.
|P/E: N/A||Forward P/E: 9.31||Industry P/E: N/A|
|P/S: 0.67||Price/Book: 1.29||EV/EBITDA: 23.18|
|Market Cap: $7.9B||Avg. Daily Volume: 7,080,200||52 Week Range: $15.47 – $24.2|
5. CenterPoint Energy, Inc. (CNP): $25.02
Shares of this public utility holding company were acquired by 2 insiders:
- President & CEO David J. Lesar acquired 50,000 shares, paying $23.58 per share for a total amount of $1.18 million. Mr. Lesar increased his stake by 17.87% to 329,722 shares with this purchase.
- EVP & CFO Jason P. Wells acquired 10,000 shares, paying $24.06 per share for a total amount of $240,600. Mr. Wells increased his stake by 10.27% to 107,416 shares with this purchase.
You can view the list of recent insider transactions for CenterPoint Energy, Inc. here.
|P/E: 23.04||Forward P/E: 17.26||Industry P/E: N/A|
|P/S: 1.86||Price/Book: 2.17||EV/EBITDA: 13.59|
|Market Cap: $14.52B||Avg. Daily Volume: 5,763,742||52 Week Range: $16.7 – $25.39|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Amazon.com, Inc. (AMZN): $3222.9
Chairman, CEO and President Jeff Bezos sold 152,762 shares of Amazon for $3228.43, generating $493.18 million from the sale.
You can view the list of recent insider transactions for Amazon.com, Inc. here.
|P/E: 61.32||Forward P/E: 44.71||Industry P/E: 50.20|
|P/S: 3.88||Price/Book: 15.72||EV/EBITDA: 28.38|
|Market Cap: $1.63T||Avg. Daily Volume: 3,719,552||52 Week Range: $2330 – $3554|
2. Fortive Corporation (FTV): $70.61
Director Steven M. Rales sold 3,560,107 shares of this scientific & technical instruments company for $71.01, generating $252.81 million from the sale.
You can view the list of recent insider transactions for Fortive Corporation here.
|P/E: 15.08||Forward P/E: 24.78||Industry P/E: 35.72|
|P/S: 4.99||Price/Book: 2.65||EV/EBITDA: 23.66|
|Market Cap: $23.9B||Avg. Daily Volume: 2,246,755||52 Week Range: $47.5481 – $75|
3. The Blackstone Group Inc. (BX): $87.48
Executive Vice Chairman Hamilton E. James sold 1,006,790 shares of this asset management company for $87.02, generating $87.61 million from the sale. 653,634 of these shares were sold indirectly by various trusts.
You can view the list of recent insider transactions for The Blackstone Group Inc. here.
|P/E: 15.99||Forward P/E: 21.92||Industry P/E: 17.67|
|P/S: 4.21||Price/Book: 7.47||EV/EBITDA: N/A|
|Market Cap: $61.65B||Avg. Daily Volume: 3,048,074||52 Week Range: $49.26 – $91.41|
4. Facebook, Inc. (FB): $315.94
COB and CEO Mark Zuckerberg sold 272,000 shares of Facebook for $312.39, generating $84.97 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: 27.07||Forward P/E: 20.8||Industry P/E: 32.30|
|P/S: 9.49||Price/Book: 6.72||EV/EBITDA: 18.59|
|Market Cap: $895.84B||Avg. Daily Volume: 20,426,247||52 Week Range: $207.11 – $331.81|
5. XPO Logistics, Inc. (XPO): $146.05
Chief Executive Officer Jacobs S. Bradley sold 144,996 shares of this supply chain solutions provider for $143.26, generating $20.77 million from the sale. These shares were sold indirectly by Jacobs Private Equity, LLC.
You can view the list of recent insider transactions for XPO Logistics, Inc. here.
|P/E: 87.93||Forward P/E: 20.43||Industry P/E: N/A|
|P/S: 0.95||Price/Book: 5.89||EV/EBITDA: 16.4|
|Market Cap: $16.32B||Avg. Daily Volume: 993,598||52 Week Range: $67.74 – $149.89|
You can view the full list of sales from this Insider Sales page.
Disclaimer: I hold a long position in SuRo Capital (SSSS). 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.