Happy holidays, Merry Christmas and welcome to edition 599 of Insider Weekends.
With earnings related quiet periods upon us, I was not expecting to see a lot of insider activity last week but was pleasantly surprised to see a number of interesting purchases last week. A pair of mortgage REIT CEOs found their way into our list of top 5 insider purchases but the purchase that captured my attention the most was the sixth largest purchase of the week. James Star, the Executive Chairman of Canadian investment firm Longview Asset Management, purchased $1.79 million worth of Chewy (CHWY) shares on the open market. This is the first insider purchase at Chewy in well over two years as the pet products focused company went on a roller coaster ride from its $22 IPO price in June 2019 to a high of nearly $120 by February 2021 before giving back large swaths of those gains and dropping to the low $50s.
The pandemic related tailwinds that fueled pure play e-commerce retailers like Chewy and Wayfair (W) have subsided and this is reflected in the Chewy’s decelerating revenue growth rate and bottom line losses. Gross margin of 26.4%, despite a 90 basis point improvement year-over-year is also not that exciting. Looking at the cash flow statement, the company is generating significant free cash flow and non-cash stock compensation expense has been coming down for several quarters. During the last 12 months, while net income was just $10.8 million, free cash flow was $169 million. With an enterprise value of $24.4 billion, the stock is certainly expensive on an EV/FCF multiple but doesn’t look that expensive at an EV/Sales of 2.86. If the company can grow or even maintain its current rate of growth (24.14% last quarter) while getting a better handle on expenses, it would be worth exploring Chewy further.
I don’t normally invest in mortgage REITs because of their leveraged balance sheets and because some of them end up paying out more than they earn to retain their high dividend yields. Starwood Property Trust (STWD) appears to be more prudent and the company has been shifting its focus since 2014 from a commercial mortgage REIT to buying a portfolio of properties. The company started its shift by acquiring four high quality regional malls in 2014, followed by a 2015 purchase of multi-family properties and office properties in Dublin, Ireland and a purchase of 34 medical office buildings in the United States in 2016. The company benefits from its close relationship with Starwood Capital Group, a real estate focused private equity firm with $105 billion of assets under management. Starwood Property Trust yields 7.74% with a payout ratio of 93%. The recent pull back in the stock following a $397 million secondary offering afforded the company’s CEO and its President an opportunity to buy shares in the low $20s.
Insider buying decreased last week with insiders purchasing $307.19 million of stock purchased compared to $606.19 million in the week prior. Selling also decreased to $2.35 billion compared to $4.06 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 7.63. In other words, insiders sold almost 8 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 6.69.
Notable Insider Buys:
1. Asana, Inc. (ASAN): $77.9
President, CEO, & Chair Dustin A. Moskovitz acquired 1,250,000 shares of this work management platform, paying $77.74 per share for a total amount of $97.17 million. Mr. Moskovitz increased his stake by 14.99% to 9,589,676 shares with this purchase.
You can view the list of recent insider transactions for Asana, Inc. here.
| P/E: N/A | Forward P/E: -78.69 | Industry P/E: 60.73 |
| P/S: 43.37 | Price/Book: 58.62 | EV/EBITDA: -64.67 |
| Market Cap: $14.52B | Avg. Daily Volume: 3,484,590 | 52 Week Range: $25.41 – $145.79 |
2. Starwood Property Trust, Inc. (STWD): $24.82
Shares of this mortgage REIT were acquired by 2 insiders:
- CEO, Chairman of Board Barry S. Sternlicht acquired 217,500 shares, paying $22.66 per share for a total amount of $4.93 million. Mr. Sternlicht increased his stake by 2.10% to 10,571,522 shares with this purchase.
- President Jeffrey F. Dimodica acquired 6,500 shares, paying $22.86 per share for a total amount of $148,590. Mr. Dimodica increased his stake by 0.65% to 1,003,998 shares with this purchase.
You can view the list of recent insider transactions for Starwood Property Trust, Inc. here.
| P/E: 15.54 | Forward P/E: 11.44 | Industry P/E: 7.85 |
| P/S: 9.88 | Price/Book: 1.6 | EV/EBITDA: N/A |
| Market Cap: $7.56B | Avg. Daily Volume: 2,262,696 | 52 Week Range: $18.25 – $27.01 |
3. Hyatt Hotels Corporation (H): $93.62
Executive Vice President, Chief Executive Officer of Apple Leisure Group Alejandro Reynal acquired 48,000 shares of Hyatt Hotels, paying $83.47 per share for a total amount of $4.01 million.
You can view the list of recent insider transactions for Hyatt Hotels Corporation here.
| P/E: N/A | Forward P/E: 135.68 | Industry P/E: N/A |
| P/S: 10.06 | Price/Book: 2.87 | EV/EBITDA: -81.95 |
| Market Cap: $10.29B | Avg. Daily Volume: 844,234 | 52 Week Range: $65.44 – $94.92 |
4. IQVIA Holdings Inc. (IQV): $278.01
Director John G. Danhakl acquired 10,000 shares of this advanced analytics, technology solutions, and clinical research services provider, paying $272.93 per share for a total amount of $2.73 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for IQVIA Holdings Inc. here.
| P/E: 70.76 | Forward P/E: 27.39 | Industry P/E: 35.60 |
| P/S: 3.92 | Price/Book: 9.11 | EV/EBITDA: 27.36 |
| Market Cap: $53.11B | Avg. Daily Volume: 819,838 | 52 Week Range: $170 – $279.68 |
5. Claros Mortgage Trust, Inc. (CMTG): $16.18
CEO and Chairman Richard Mack acquired 114,904 shares of this commercial real estate (CRE) finance company, paying $16.58 per share for a total amount of $1.9 million. Mr. Mack increased his stake by 11.43% to 1,120,193 shares with this purchase.
You can view the list of recent insider transactions for Claros Mortgage Trust, Inc. here.
| P/E: 11.01 | Forward P/E: 10.05 | Industry P/E: N/A |
| P/S: 8.56 | Price/Book: 0.91 | EV/EBITDA: N/A |
| Market Cap: $2.16B | Avg. Daily Volume: 227,933 | 52 Week Range: $14.96 – $18.59 |
6. Chewy, Inc. (CHWY): $59.26
Director James A. Star acquired 32,278 shares of this pet focused e-commerce retailer, paying $55.58 per share for a total amount of $1.79 million. Mr. Star increased his stake by 75.87% to 74,822 shares with this purchase.
You can view the list of recent insider transactions for Chewy, Inc. here.
| P/E: 2279.23 | Forward P/E: N/A | Industry P/E: 45.08 |
| P/S: 2.9 | Price/Book: 375.06 | EV/EBITDA: 501.77 |
| Market Cap: $24.77B | Avg. Daily Volume: 4,105,615 | 52 Week Range: $50.05 – $120 |
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Tesla, Inc. (TSLA): $1067
Shares of Tesla were sold by 2 insiders:
- CEO Elon Musk sold 1,517,702 shares for $959.73, generating $1.46 billion from the sale.
- Chief Financial Officer Zachary Kirkhorn sold 1,250 shares for $915.00, generating $1.14 million from the sale.
You can view the list of recent insider transactions for Tesla, Inc. here.
| P/E: 348.47 | Forward P/E: 129.33 | Industry P/E: 25.62 |
| P/S: 22.87 | Price/Book: 39.6 | EV/EBITDA: 146.84 |
| Market Cap: $1.07T | Avg. Daily Volume: 26,793,157 | 52 Week Range: $539.49 – $1243.49 |
2. Walmart Inc. (WMT): $139.49
Director Robson S. Walton sold 1,313,314 shares of Walmart for $139.05, generating $182.62 million from the sale. These shares were sold indirectly by a trust.
You can view the list of recent insider transactions for Walmart Inc. here.
| P/E: 49.12 | Forward P/E: 20.76 | Industry P/E: 38.47 |
| P/S: 0.68 | Price/Book: 4.71 | EV/EBITDA: 10.86 |
| Market Cap: $386.93B | Avg. Daily Volume: 8,848,274 | 52 Week Range: $126.28 – $152.57 |
3. Medpace Holdings, Inc. (MEDP): $223.37
CEO August J. Troendle sold 110,432 shares of this clinical research-based drug and medical device development services provider for $216.08, generating $23.86 million from the sale. These shares were purchased indirectly by Medpace Investors, LLC.
You can view the list of recent insider transactions for Medpace Holdings, Inc. here.
| P/E: 46.25 | Forward P/E: 40.76 | Industry P/E: 35.60 |
| P/S: 7.34 | Price/Book: 8.89 | EV/EBITDA: 35.16 |
| Market Cap: $8.03B | Avg. Daily Volume: 168,739 | 52 Week Range: $130.735 – $231 |
4. MP Materials Corp. (MP): $43.12
Director Daniel Allen Gold sold 482,800 shares of this rare earth mining company for $42.40, generating $20.47 million from the sale. These shares were sold indirectly by various entities.
You can view the list of recent insider transactions for MP Materials Corp. here.
| P/E: 65.04 | Forward P/E: 42.69 | Industry P/E: 8.87 |
| P/S: 27.89 | Price/Book: 8.03 | EV/EBITDA: 46.11 |
| Market Cap: $7.67B | Avg. Daily Volume: 2,501,615 | 52 Week Range: $23.18 – $51.77 |
5. Agilent Technologies, Inc. (A): $157.8
CEO and President Michael R. McMullen sold 123,459 shares of this application focused solutions provider for $148.82, generating $18.37 million from the sale.
You can view the list of recent insider transactions for Agilent Technologies, Inc. here.
| P/E: 40.05 | Forward P/E: 33.43 | Industry P/E: 35.60 |
| P/S: 7.54 | Price/Book: 8.85 | EV/EBITDA: 28.34 |
| Market Cap: $47.66B | Avg. Daily Volume: 1,570,877 | 52 Week Range: $112.47 – $179.57 |
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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