Happy New Year and welcome to edition 600 of Insider Weekends. With folks out for the holidays and the fourth quarter earnings related quiet periods at most companies, insider buying declined significantly last week with insiders purchasing $13.35 million of stock purchased compared to $307.19 million in the week prior. Selling also decreased to $1.71 billion compared to $2.35 billion in the week prior.
Given the low level of insider activity last week, pickings were slim on the buy side and that is why we focused on two merger arbitrage and spinoff situations in our January 2022 Special Situations newsletter. The only purchase from last week that stood out was the 20,000 purchase of residential solar company Sunnova Energy International (NOVA) by its Director Akbar Mohamed. Mr. Mohamed has worked on Goldman Sachs’ M&A desk, at a Dallas-based private equity firm and as the President of Prime Communications, LP, the largest AT&T authorized retailer in the U.S. He is also a Certified Public Accountant. He was appointed to NOVA’s board as an independent director in December 2020.
NOVA and other solar companies like Sunrun (RUN) were hit hard last month after California regulators proposed cutting back what homeowners with solar installations can get for selling their excess energy back to their utility. Rates could come down to $0.03-$0.04/KWh down from $0.17-$0.44 previously and there could be an increase in the delivery fees charged by the utility company. As investors would recall, when Nevada attempted to pass similar changes in 2015, the bill saw significant backlash from consumers and solar rooftop installers threatened to entirely exit the state because the new changes made rooftop solar uneconomical for existing and new customers.
It is possible that Mr. Mohamed thinks that California, which accounts for a third of the nation’s new rooftop solar installations, will not allow the proposal to stand in its current format and that other state and federal incentives, including some in President Biden’s Build Back Better Act, will more than offset the impact of these new proposals.
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 127.86. In other words, insiders sold almost 128 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 7.63.