Insider Weekends: William Furman Steps Up His Purchases Of Greenbrier

Welcome to edition 577 of Insider Weekends. Insider buying declined significantly last week with insiders purchasing $31.92 million of stock purchased compared to $126.91 million in the week prior. Selling also decreased to $1.56 billion compared to $1.72 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 went up to 48.89. In other words, insiders sold almost 49 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week when the ratio stood at 13.52.

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. The Greenbrier Companies, Inc. (GBX): $40.94

Chairman & CEO William A. Furman acquired 100,000 shares of this Oregon-based railroad freight car equipment company, paying $43.08 per share for a total amount of $4.31 million. Mr. Furman increased his stake by 17.47% to 672,518 shares with this purchase.

This is the third time this year Mr. Furman has purchased shares of Greenbrier. He purchased 50,000 shares in February, 60,000 shares in April and his latest purchase of 100,000 shares eclipses his prior purchases this year. We wrote the following about the company in February,

Greenbrier manufactures, leases and manages railcars in North America, Europe and Brazil. The first time I came across Greenbrier was in the summer of 2011 after noticing a cluster of insider purchases by Mr. Furman and another director in the low teens. He also made an opportunistic purchase last May when he picked up 100,000 shares at an average price of $16.52 as you can see here. It is encouraging to see him “average up” at much higher prices, especially considering he was a seller at these prices back in 2017.

On the business front, Greenbrier has been a mixed bag. While the company has done a great job of reducing debt over the last ten years and using debt judiciously for acquisitions, earnings have declined in four out of the last five years. Over those five years, gross margins have declined from 22.8% in fiscal 2016 to 13.2% for fiscal 2020 ended August 2020.

GBX Revenue and Gross Margins

GBX Revenue and Gross Margins (source: GBX Q1 2021 Earnings Presentation)

Part of this is related to the decline in demand for railcars since 2015 as you can see from the following slide from Greenbrier’s investor presentation. The good news is that this trend is expected to reverse with demand projected to start improving next year. With the Biden administration blocking oil pipeline construction, more oil is likely to be transported by rail and this would benefit Greenbrier. So would a post-pandemic rebound in economic activity. There have been concerns about capital allocation and succession planning at Greenbrier as Mr. Furman is 76 years old and is expected to retire in September 2022.

GBX Railcar Demand Actual and Estimated

GBX Railcar Demand Actual and Estimated (source: GBX Investor Presentation)

Mr. Furman’s optimism for Greenbrier continues to perplex me. Revenue was down a whopping 41% for their fiscal Q3 2021 ended May 31, 2021 and this is the sixth quarter in a row that revenue has been down year-over-year. However there are a few positive signs including an increase in revenue on a sequential quarter basis, significant improvement in gross margins, the company entering a new line of business (leasing) with higher gross margins and expectations that their fiscal Q4 will be the strongest quarter of the year. The company is also buying back its own stock with $100 million authorized under a share repurchase plan.

You can view the list of recent insider transactions for The Greenbrier Companies, Inc. here.

P/E: 3721.82 Forward P/E: 14.12 Industry P/E: 30.27
P/S: 0.74 Price/Book: 1.03 EV/EBITDA: 17.89
Market Cap: $1.33B Avg. Daily Volume: 373,290 52 Week Range: $24.75 – $50.21

2. Hibbett, Inc. (HIBB): $86.13

Shares of this specialty retail company were acquired by 2 insiders:

  • SVP and CIO Ronald P. Blahnik acquired 2,200 shares, paying $89.74 per share for a total amount of $197,428. Mr. Blahnik increased his stake by 9.36% to 25,713 shares with this purchase.
  • SVP General Counsel David Mitchell Benck acquired 2,000 shares, paying $87.77 per share for a total amount of $175,540. Mr. Benck increased his stake by 33.36% to 7,995 shares with this purchase.

Hibbett, formerly known as Hibbett Sports, operates over 1,000 stores across 35 U.S. states and has been a big beneficiary of the pandemic related demand for sporting goods and especially sneakers, which is a specific area of focus for the company. The company was perpetually cheap pre-pandemic oscillating between an EV/EBITDA of 2 to 8  on account of declining net income and slim margins. Their performance during the pandemic has however been off the charts with the stock rising more than 750% from its March 2020 lows and up more than 200% from pre-pandemic levels.

HIbbett Sports Sneakers

HIbbett Sports Sneakers

Revenue and earnings growth has not slowed down recently and benefited both from the reopening of the economy and stimulus checks. For the fiscal Q1 2022 ended May 31, 2021, the company reported same-store-sales at its brick and mortar stores increasing by 113.5% and e-commerce sales increasing 1% to represent 11.7% of total revenue of $506.9 million. The company saw an increase in gross margins and net margins, reporting EPS of $5 per share. It is not surprising that the company insiders are buying shares even as the company buys back its own shares. Whether this performance continues after things normalize remains to be seen.

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

P/E: 8.47 Forward P/E: 9.66 Industry P/E: 23.53
P/S: 0.83 Price/Book: 3.15 EV/EBITDA: 4.73
Market Cap: $1.38B Avg. Daily Volume: 415,244 52 Week Range: $22.06 – $98.35

3. Conagra Brands, Inc. (CAG): $34.86

Director Richard H. Lenny acquired 10,000 shares of this consumer packaged goods food company, paying $34.14 per share for a total amount of $341,400. Mr. Lenny increased his stake by 8.46% to 128,261 shares with this purchase.

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

P/E: 13.11 Forward P/E: 13.25 Industry P/E: 23.34
P/S: 1.5 Price/Book: 1.94 EV/EBITDA: 10.68
Market Cap: $16.73B Avg. Daily Volume: 3,261,890 52 Week Range: $32.55 – $39.34

4. SVB Financial Group (SIVB): $561.76

Director Garen K. Staglin acquired 500 shares of this regional bank, paying $588.02 per share for a total amount of $294,010. Mr. Staglin increased his stake by 3.53% to 14,680 shares with this purchase.

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

P/E: 18.49 Forward P/E: 21.46 Industry P/E: 12.15
P/S: 6.71 Price/Book: 3.44 EV/EBITDA: N/A
Market Cap: $30.51B Avg. Daily Volume: 413,112 52 Week Range: $214.78 – $608.84

5. Accelerate Diagnostics, Inc. (AXDX): $6.53

Director Jack W. Schuler acquired 29,577 shares of this in vitro diagnostics company, paying $9.20 per share for a total amount of $272,108. These shares were purchased indirectly through a trust.

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

P/E: N/A Forward P/E: -5.44 Industry P/E: N/A
P/S: 35.15 Price/Book: N/A EV/EBITDA: -7.75
Market Cap: $398.62M Avg. Daily Volume: 186,284 52 Week Range: $6.44 – $18.56

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $341.16

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 386,500 shares for $349.81, generating $135.2 million from the sale. These shares were sold indirectly by various entities.
  • VP and General Counsel Jennifer Newstead sold 250 shares for $351.40, generating $87,850 from the sale.

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

P/E: 29.23 Forward P/E: 22.42 Industry P/E: 34.46
P/S: 10.25 Price/Book: 7.25 EV/EBITDA: 20.16
Market Cap: $967.35B Avg. Daily Volume: 17,008,909 52 Week Range: $226.9 – $358.79

2. Alphabet Inc. (GOOG): $2636.91

Director Sergey Brin sold 27,776 shares of Alphabet for $2538.93, generating $70.52 million from the sale.

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

P/E: 35.14 Forward P/E: 27.77 Industry P/E: 34.46
P/S: 8.83 Price/Book: 7.69 EV/EBITDA: 26.23
Market Cap: $1.74T Avg. Daily Volume: 1,240,690 52 Week Range: $1406.55 – $2659.92

3. C3.ai, Inc. (AI): $50.64

Shares of this enterprise artificial intelligence (AI) software company were sold by 3 insiders:

  • Chief Executive Officer Thomas M. Siebel sold 667,291 shares for $53.65, generating $35.8 million from the sale.
  • Chief Technology Officer Edward Y. Abbo sold 86,768 shares for $51.69, generating $4.49 million from the sale. 74,399 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Product Officer Houman Behzadi sold 70,000 shares for $58.36, generating $4.09 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 C3.ai, Inc. here.

P/E: N/A Forward P/E: -58.88 Industry P/E: 60.37
P/S: 28.58 Price/Book: 4.88 EV/EBITDA: -74.15
Market Cap: $5.24B Avg. Daily Volume: 3,487,419 52 Week Range: $47.22 – $183.9

4. Bentley Systems, Incorporated (BSY): $58.9

Director Barry J. Bentley sold 577,598 shares of this infrastructure engineering software solutions provider for $62.80, generating $36.27 million from the sale.

You can view the list of recent insider transactions for Bentley Systems, Incorporated here.

P/E: 117.57 Forward P/E: N/A Industry P/E: 60.37
P/S: 19.66 Price/Book: 45.55 EV/EBITDA: 67.84
Market Cap: $16.3B Avg. Daily Volume: 1,906,065 52 Week Range: $27 – $67

5. Copart, Inc. (CPRT): $140.14

Shares of this online auctions and vehicle remarketing services provider were sold by 2 insiders:

  • Chief Executive Officer Jayson A. Adair sold 130,000 shares for $139.21, generating $18.09 million from the sale. These shares were sold indirectly by a trust.
  • Director Steven D. Cohan sold 80,000 shares for $139.46, generating $11.16 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 Copart, Inc. here.

P/E: 39.8 Forward P/E: 35.57 Industry P/E: 72.08
P/S: 13.43 Price/Book: 10.2 EV/EBITDA: 28.37
Market Cap: $33.15B Avg. Daily Volume: 923,306 52 Week Range: $84.66 – $141.32

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: 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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