Insider Weekends: Howard Jonas Acquires $5 Million Worth Of Rafael Holdings

One of the things that excites me about reviewing insider transactions each weekend is the discovery of a new company that I might not have been aware of or that I did not pay enough attention to in the past. The transaction is often a catalyst that triggers further research and provides a framework for idea discovery. For companies that look interesting, we review insider purchases during the prior decade  to see if any patterns emerge and also keep track of purchases by insiders across companies in case they serve on the boards of multiple companies. To improve the signal from these transactions, we exclude any option exercises, participation in secondary offerings and private party transactions. Once in a while, we make an exception to this rule and the purchase of Rafael Holdings by its CEO Howard Jonas is one of those exceptions as discussed below.

Welcome to edition 582 of Insider Weekends. Insider buying increased last week with insiders purchasing $93.99 million of stock purchased compared to $84.25 million in the week prior. Selling also increased to $3.32 billion compared to $2.78 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 35.37 In other words, insiders sold more than 33 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 32.99.

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. Rafael Holdings, Inc. (RFL): $47.6

Chief Executive Officer Howard S. Jonas acquired 112,561 shares of this pharmaceutical and real estate company, paying $44.92 per share for a total amount of $5.06 million. These shares were purchased indirectly through a trust.

The footnotes of this form 4 filing indicated that the transaction was the result of a “Purchase of shares from the Registrant in a private placement”. I was about to exclude this purchase from this week’s list of notable insider purchases but decided to take a second look considering this was the only insider purchase at the company since it was spun out of IDT in March 2018. To learn more about Howard Jonas check out the 2017 WSJ article titled How Telecom Speculator Howard Jonas Made Billions From Verizon, AT&T.

Long time readers of Inside Arbitrage and arbitrageurs probably fondly remember the back and forth battle between AT&T and Verizon for Straight Path Communications, which resulted in Straight Path’s stock price nearly doubling during the battle from the original AT&T offer of $95.63 per share to the $184 per share Verizon finally ended up paying. Straight Path Communications was another IDT (IDT) spinoff.

Mr. Jonas is very opportunistic with his purchases as you can see here. His last insider purchase was of the mobile app developer Zedge (ZDGE) for $2.11 in March 2019. Zedge was spun out of IDT in 2016 and currently trades for $16.20 after years of lackluster performance. He also purchased a million shares of IDT in a well timed purchase in 2017 at an average price of $14.93 per share. Rafael Pharmaceutics is a late stage oncology company that is in the process of merging with Rafael Holdings, which has a stake in Rafael Pharmaceuticals, real estate and other holdings. After the merger, Rafael Holdings shareholders will own 52% of the combined company and the real estate holdings will be liquidated to fund the company. The combined company will continue to trade on the NYSE with the symbol RFL.

Rafael Holdings Assets

Rafael Holdings Assets

 

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

P/E: N/A Forward P/E: N/A Industry P/E: 38.64
P/S: 231.83 Price/Book: 6.3 EV/EBITDA: -75.44
Market Cap: $983.44M Avg. Daily Volume: 117,590 52 Week Range: $14.8 – $66.44

2. Apartment Investment and Management Company (AIV): $7.08

Director Terry Considine acquired 450,000 shares of this residential REIT, paying $6.53 per share for a total amount of $2.94 million. These shares were purchased indirectly in a retirement plan set up for Mr. Considine’s spouse.

We have written about AIV insider purchases by Mr. Considine several times this year including in March when we wrote the following,

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: 27.23 Industry P/E: 56.25
P/S: 6.75 Price/Book: 2.1 EV/EBITDA: 32.86
Market Cap: $1.06B Avg. Daily Volume: 2,298,356 52 Week Range: $3.28487 – $7.74

3. Hippo Holdings Inc. (HIPO): $4.75

Shares of this insurance company were acquired by 7 insiders:

  • Director Noah Knauf acquired 167,213 shares, paying $4.37 per share for a total amount of $730,721.
  • Director Eric Feder acquired 125,000 shares, paying $4.29 per share for a total amount of $536,062. These shares were purchased indirectly by Beep Investments, LLC.
  • Director Sandra S. Wijnberg acquired 117,000 shares, paying $4.28 per share for a total amount of $500,374. These shares were purchased indirectly through a trust.
  • Chief Financial Officer Stewart Ellis acquired 24,400 shares, paying $4.25 per share for a total amount of $103,700. Mr. Ellis increased his stake by 0.78% to 3,132,825 shares with this purchase.
  • President Richard McCathron acquired 24,100 shares, paying $4.25 per share for a total amount of $102,425. Mr. McCathron increased his stake by 0.96% to 2,532,601 shares with this purchase.
  • Chief Executive Officer and Co-Founder Assaf Wand acquired 23,195 shares, paying $4.15 per share for a total amount of $96,295. Mr. Wand increased his stake by 0.14% to 17,111,143 shares with this purchase.
  • Director Sam Landman acquired 5,813 shares, paying $4.25 per share for a total amount of $24,699.

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

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 39.46 Price/Book: N/A EV/EBITDA: -3.11
Market Cap: $2.66B Avg. Daily Volume: 717,904 52 Week Range: $3.78 – $15.05

4. Vertex Pharmaceuticals Incorporated (VRTX): $199.92

CEO & President Reshma Kewalramani acquired 10,000 shares of this biotech company, paying $195.65 per share for a total amount of $1.96 million. Mr. Kewalramani increased his stake by 15.69% to 73,754 shares with this purchase.

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

P/E: 26.36 Forward P/E: 15.32 Industry P/E: N/A
P/S: 7.76 Price/Book: 5.63 EV/EBITDA: 19.32
Market Cap: $51.86B Avg. Daily Volume: 2,439,076 52 Week Range: $185.33 – $283.45

5. ON24, Inc. (ONTF): $22.9

Shares of this cloud-based digital experience platform were acquired by 2 insiders:

  • Director Barry Zwarenstein acquired 25,000 shares, paying $20.45 per share for a total amount of $511,188. Mr. Zwarenstein increased his stake by 142.86% to 42,500 shares with this purchase.
  • President and Chief Executive Sharat Sharan acquired 23,500 shares, paying $22.12 per share for a total amount of $519,829. Mr. Sharan increased his stake by 1.23% to 1,933,172 shares with this purchase.

You can view the list of recent insider transactions for ON24, Inc. here.

P/E: N/A Forward P/E: -1145 Industry P/E: 62.86
P/S: 5.39 Price/Book: 2.93 EV/EBITDA: 42.84
Market Cap: $1.07B Avg. Daily Volume: 717,014 52 Week Range: $19.3 – $81.98

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

Notable Insider Sales:

1. Walmart Inc. (WMT): $146.52

Shares of Walmart were sold by 2 insiders:

  • Director Robson S. Walton sold 2,288,000 shares for $148.54, generating $339.86 million from the sale. These shares were sold indirectly through a trust.
  • President and CEO Douglas C. McMillon sold 9,708 shares for $147.95, generating $1.44 million from the sale.

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

P/E: 41.24 Forward P/E: 22.13 Industry P/E: 32.78
P/S: 0.73 Price/Book: 5.09 EV/EBITDA: 11.14
Market Cap: $410.57B Avg. Daily Volume: 7,431,207 52 Week Range: $126.28 – $153.66

2. The Carlyle Group Inc. (CG): $48.37

Director Daniel A. D’Aniello sold 5,000,000 shares of this investment firm for $47.10, generating $235.49 million from the sale.

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

P/E: 6.76 Forward P/E: 13.86 Industry P/E: 15.71
P/S: 2.25 Price/Book: 3.95 EV/EBITDA: 6.3
Market Cap: $17.3B Avg. Daily Volume: 1,967,720 52 Week Range: $23.48 – $51.55

3. Facebook, Inc. (FB): $372.63

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 386,500 shares for $362.09, generating $139.95 million from the sale. These shares were sold indirectly by various entities.
  • VP and General Counsel Jennifer Newstead sold 250 shares for $364.00, generating $91,000 from the sale.

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

P/E: 27.67 Forward P/E: 23.27 Industry P/E: 31.11
P/S: 10.03 Price/Book: 7.62 EV/EBITDA: 18.74
Market Cap: $1.05T Avg. Daily Volume: 13,944,984 52 Week Range: $244.13 – $377.55

4. Arista Networks, Inc. (ANET): $372.86

Shares of this cloud networking solutions were sold by 4 insiders:

  • Chief Development Officer Andreas Bechtolsheim sold 200,000 shares for $372.26, generating $74.45 million from the sale. 100,000 of these shares were sold as a result of exercising options immediately prior to the sale.
  • President and CEO Jayshree Ullal sold 25,437 shares for $373.86, generating $9.51 million from the sale.
  • SVP, Chief Operating Officer Anshul Sadana sold 1,845 shares for $376.06, generating $693,823 from the sale.
  • Director Ann Mather sold 220 shares for $367.26, generating $80,797 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 Arista Networks, Inc. here.

P/E: 40.7 Forward P/E: 31.33 Industry P/E: 34.31
P/S: 10.88 Price/Book: 7.73 EV/EBITDA: 29.34
Market Cap: $28.6B Avg. Daily Volume: 413,301 52 Week Range: $192.96 – $384

5. Paylocity Holding Corporation (PCTY): $264.9

Director Steven I. Sarowitz sold 150,269 shares of this software application company for $254.63, generating $38.26 million from the sale.

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

P/E: 210.24 Forward P/E: 119.32 Industry P/E: 62.87
P/S: 22.76 Price/Book: 30.32 EV/EBITDA: 178.61
Market Cap: $14.46B Avg. Daily Volume: 194,445 52 Week Range: $130.945 – $266.49

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 Vertex Pharmaceuticals (VRTX). 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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