Insider Weekends: The Pied Piper Is Heading Out Of Town

Folktales like The Pied Piper of Hamelin were often used to communicate important concepts in a simple story format that tended to stay with their young listeners or readers. What we are witnessing in a market that appears stretched by any metric you may choose to measure it with, is a Pied Piper heading out of town, selling significant amount of stock on his way out. The $6.9 billion sale of Tesla (TSLA) by its CEO Elon Musk last week exceeds the sum total of all insider sales we have seen in a single week for more than a decade. The sales started out with 10 separate SEC filings on Wednesday representing $4.98 billion worth of stock sold that we wrote about in a Twitter thread that night. Mr. Musk sold an additional $1.92 billion worth of stock according to a new filing late Friday night. I would be surprised if he is done selling.

Tesla Sales Twitter Thread

Tesla Sales Twitter Thread

At various times during Tesla’s journey, I have been both bullish and bearish the stock. Mr. Musk at various points has also pointed out that the valuation is stretched. The cars Tesla makes are undeniably fun to drive despite occasional problems such as the issue with the superbottle that cools both the cabin and the batteries. With a market cap of over $1 trillion, the probability tilts more towards it heading in the direction of $500 billion instead of $2 trillion, especially with insiders selling at a rapid pace.

Besides, Mr. Musk, others insiders that sold shares in November include his brother Kimbal Musk, who sold 88,500 shares worth $108.77 million and the Chair of the Board of Directors, Robyn Denholm who sold 25,000 shares for $28.54 million. Ms. Denholm exercised 25,000 options at a strike price of $52.38 before turning around and selling them.

I am not just concerned about this level of insider selling at Tesla but insiders as a group have significantly stepped up their selling. We wrote the following about their selling last week after they sold $6.65 billion worth of stock in a single week,

This is a very significant six-fold increase in insider selling even after we discount the large $3.33 billion sale of Amazon by Jeff Bezos. In over a decade of tracking insider transactions, I don’t think I have ever seen this level of insider selling in a single week. Just like the big spike in insider purchases in mid-March 2020 provided a strong buying signal, it would behoove investors to pay attention to elevated levels of insider selling, especially if it continues in the coming weeks.

On the insider purchases side, it was interesting to see an insider of another reinsurance company (Arch Capital) purchase shares and continued buying in the energy sector (Continental Resources) as outlined below.

Welcome to edition 593 of Insider Weekends. Insider buying increased last week with insiders purchasing $140.46 million of stock purchased compared to $123.44 million in the week prior. Selling increased significantly to $10.04 billion compared to $6.65 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 71.48. In other words, insiders sold more than 71 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 53.83.

Notable Insider Buys:

1. Arch Capital Group Ltd. (ACGL): $42.02

Director John M. Pasquesi acquired 484,544 shares of this insurance company, paying $41.23 per share for a total amount of $19.98 million. These shares were purchased indirectly by various trusts.

You can view the list of recent insider transactions for Arch Capital Group Ltd. here.

P/E: 8.47 Forward P/E: 11.3 Industry P/E: 10.46
P/S: 1.74 Price/Book: 1.29 EV/EBITDA: 6.46
Market Cap: $16.23B Avg. Daily Volume: 1,958,873 52 Week Range: $31.23 – $43.72

2. Skillz Inc. (SKLZ): $12.5

Shares of this mobile esports platform were acquired by 3 insiders:

  • Chief Executive Officer Andrew Paradise acquired 432,105 shares, paying $11.50 per share for a total amount of $4.97 million.
  • Director Casey Chafkin acquired 86,500 shares, paying $11.63 per share for a total amount of $1 million. Mr. Chafkin increased his stake by 0.69% to 12,686,794 shares with this purchase.
  • Director Harry Sloan acquired 80,000 shares, paying $12.48 per share for a total amount of $998,016.

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

P/E: N/A Forward P/E: -25.51 Industry P/E: 159.88
P/S: 14.87 Price/Book: 7.24 EV/EBITDA: -21.46
Market Cap: $5.1B Avg. Daily Volume: 17,670,781 52 Week Range: $7.97 – $46.298

3. Continental Resources, Inc. (CLR): $47.25

Shares of this oil and natural gas exploration and production company were acquired by 2 insiders:

  • Director Harold Hamm acquired 108,500 shares, paying $47.69 per share for a total amount of $5.17 million. Mr. Hamm increased his stake by 0.79% to 13,800,217 shares with this purchase.
  • Director John T. McNabb II acquired 2,000 shares, paying $45.71 per share for a total amount of $91,420. Mr. McNabb increased his stake by 3.80% to 54,673 shares with this purchase.

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

P/E: 20.82 Forward P/E: 8.9 Industry P/E: 18.68
P/S: 3.83 Price/Book: 2.48 EV/EBITDA: 6.23
Market Cap: $17.27B Avg. Daily Volume: 1,754,015 52 Week Range: $13.83 – $55.48

4. AT&T Inc. (T): $24.94

Director Stephen J. Luczo acquired 100,000 shares of AT&T, paying $25.04 per share for a total amount of $2.5 million. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for AT&T Inc. here.

P/E: 193.33 Forward P/E: 7.79 Industry P/E: 11.60
P/S: 1.03 Price/Book: 1.09 EV/EBITDA: 7.24
Market Cap: $178.1B Avg. Daily Volume: 39,156,204 52 Week Range: $24.54 – $33.88

5. EverQuote, Inc. (EVER): $15.34

Director David B. Blundin acquired 159,344 shares of this online marketplace for insurance shopping, paying $14.44 per share for a total amount of $2.3 million. Mr. Blundin increased his stake by 178.43% to 248,649 shares with this purchase.

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

P/E: N/A Forward P/E: -23.24 Industry P/E: 28.55
P/S: 1.1 Price/Book: 5.27 EV/EBITDA: -35.48
Market Cap: $453.81M Avg. Daily Volume: 407,906 52 Week Range: $12.04 – $54.96

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

Notable Insider Sales:

1. Tesla, Inc. (TSLA): $1,033.42

CEO Elon Musk sold 6,361,875 shares of Tesla for $1085.53, generating $6.91 billion from the sale. These shares were sold indirectly through a trust.

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

P/E: 337.5 Forward P/E: 127.9 Industry P/E: 24.70
P/S: 22.15 Price/Book: 38.35 EV/EBITDA: 142.2
Market Cap: $1.04T Avg. Daily Volume: 23,187,680 52 Week Range: $404.09 – $1243.49

2. Alphabet Inc. (GOOG): $2,992.91

Shares of Alphabet were sold by 4 insiders:

  • Director Sergey Brin sold 83,334 shares for $2,967.08, generating $247.26 million from the sale.
  • SVP, Chief Business Officer Philipp Schindler sold 7,951 shares for $2,994.60, generating $23.8 million from the sale.
  • Director Kavitark Ram Shriram sold 5,000 shares for $2,988.24, generating $14.94 million from the sale.
  • Director John L. Hennessy sold 201 shares for $2,989.49, generating $600,887 from the sale. These shares were sold indirectly through a trust.

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

P/E: 28.83 Forward P/E: 26.69 Industry P/E: 28.55
P/S: 8.28 Price/Book: 8.13 EV/EBITDA: 21.98
Market Cap: $1.98T Avg. Daily Volume: 1,106,546 52 Week Range: $1699 – $3020.69

3. Airbnb, Inc. (ABNB): $206.54

Shares of Airbnb were sold by 5 insiders:

  • Chief Strategy Officer Nathan Blecharczyk sold 499,900 shares for $200.25, generating $100.11 million from the sale. 174,616 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Director Belinda J. Johnson sold 200,000 shares for $199.95, generating $39.99 million from the sale.
  • Director Jeffrey D. Jordan sold 30,000 shares for $193.09, generating $5.79 million from the sale. These shares were sold indirectly through a trust.
  • Chief Technology Officer Aristotle N. Balogh sold 10,000 shares for $186.18, generating $1.86 million from the sale.
  • Global Head of Hosting Catherine C. Powell sold 5,000 shares for $190.00, generating $950,000 from the sale.

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

P/E: N/A Forward P/E: 344.23 Industry P/E: N/A
P/S: 24.67 Price/Book: 29.05 EV/EBITDA: -44.31
Market Cap: $131.23B Avg. Daily Volume: 5,989,356 52 Week Range: $121.5 – $219.94

4. The Carlyle Group Inc. (CG): $60.14

Director David M. Rubenstein sold 2,000,000 shares of this investment firm for $58.00, generating $116 million from the sale.

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

P/E: 7.78 Forward P/E: 14.96 Industry P/E: 15.98
P/S: 2.58 Price/Book: 4.51 EV/EBITDA: 6.77
Market Cap: $21.44B Avg. Daily Volume: 2,082,415 52 Week Range: $27.57 – $60.4

5. Meta Platforms, Inc. (FB): $340.89

Shares of Meta Platforms were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 231,900 shares for $339.47, generating $78.72 million from the sale. These shares were sold indirectly by various entities.
  • Chief Legal Officer Jennifer Newstead sold 121 shares for $339.87, generating $41,124 from the sale.

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

P/E: 24.39 Forward P/E: 23.94 Industry P/E: 28.55
P/S: 8.44 Price/Book: 7.14 EV/EBITDA: 15.83
Market Cap: $948.27B Avg. Daily Volume: 19,820,638 52 Week Range: $244.61 – $384.33

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 and Plus 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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