We are very excited to introduce two new features on Inside Arbitrage this week. Our symbol metrics page, which includes information about insider transactions and buybacks, now includes a price chart with insider purchases overlayed on it as you can see here for the energy company Continental Resources (CLR).
Rolling your mouse over a purchase displays, which insider purchased shares, at what price and the performance of the stock since that purchase as you can see below.
In keeping with our commitment to deliver more value to premium members through new tools and analysis while holding the price of the premium service the same for over four years, we are rolling out a new screen called Spinsider. The Spinsider screen automatically identifies management insider buying in companies that were spun out of a parent. The screen can also be used to find parent companies with insider buying and can be modified to include insider purchases by 10% owners and Directors. This screen was modeled after our Double Dipper screen that identifies a list of companies that are buying back their shares while their insiders are independently buying stock on the open market for their own portfolios.
The top company on the Spinsider screen, Warner Bros. Discovery (WBD) was created through a Reverse Morris Trust transaction when AT&T spun-off its WarnerMedia division and merged it with Discovery. The Reverse Morris Trust structure is used to allow for a tax-free spinoff and was also used by Pfizer (PFE) when it spun-off its generic drugs division Upjohn and merged it with Mylan to create Viatris (VTRS). As is often the case with stock spin-offs, Warner Bros. Discovery was down nearly 27% after the spin-off. Four different insiders of the company purchased shares on the open market, including the CEO and CFO, as discussed below.
In a month where we experienced the worst monthly drop in the Nasdaq since 2008 and where the big tech companies that were holding up the indexes also dropped, insiders stepped up as we expected to buy a significant amount of stock last week. Insiders purchased 11 times more stock last week than they purchased in the week prior. The $463 million of purchases were also significantly above the $6 million of purchases we saw during the same week in April 2021 and $15 million of purchases during the last week of April 2020.
The number is unusually high last week because the father-son duo Ernest Garcia II and Ernest Garcia III purchased shares of online car dealer Carvana (CVNA) in a secondary offering. They collectively purchased $364 million in a secondary offering but their purchases pale in comparison to the elder Garcia’s $1.15 billion of sales of Carvana in 2020 and $2.25 billion of sales in 2021 as you can see here. The stock has been under pressure lately as it launched a $1.25 billion secondary offering to sell class A shares and Apollo Global stepped in to pick up half of the $3.275 billion in debt it was trying to sell at a high yield of 10.25%. Carvana needed the capital to fund its $2.2 billion acquisition of KAR Global’s auction business. The stock is down more than 80% from a peak of over $370 last August.
The other big event last week was Elon Musk’s acquisition of Twitter (TWTR) in a deal financed through $13 billion in debt from banks, $12.5 billion through a margin loan on his Tesla (TSLA) shares and an additional $21 billion in equity financing from him. Towards this end, he sold 9.645 million shares of Tesla generating $8.52 billion from the sales. We discussed his sales of Tesla late last year in an article titled The Pied Piper Is Heading Out Of Town.
Welcome to edition 617 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $462.93 million of stock compared to $41.43 million in the week prior. Selling also increased significantly to $8.98 billion compared to $704.53 million 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 19.39. In other words, insiders sold more than 19 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 17.
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Notable Insider Buys:
1. The Charles Schwab Corporation (SCHW): $66.33
CEO Walter W. Bettinger acquired 140,000 shares of Charles Schwab, paying $68.10 per share for a total amount of $9.53 million. Mr. Bettinger increased his stake by 47.84% to 432,625 shares with this purchase.
You can view the list of recent insider transactions for The Charles Schwab Corporation here.
|P/E: 23.44||Forward P/E: 13.19||Industry P/E: 12.77|
|P/S: 6.79||Price/Book: 2.71||EV/EBITDA: N/A|
|Market Cap: $125.72B||Avg. Daily Volume: 8,680,220||52 Week Range: $65.73 – $96.24|
2. Warner Bros. Discovery, Inc. (WBD): $18.15
Shares of Warner Bros. Discovery were acquired by 4 insiders:
- Director Robert R. Bennett acquired 53,000 shares, paying $18.88 per share for a total amount of $1 million. Mr. Bennett increased his stake by 544.32% to 62,737 shares with this purchase.
- Chief Executive Officer & President David Zaslav acquired 50,200 shares, paying $19.93 per share for a total amount of $1 million. Mr. Zaslav increased his stake by 1.24% to 4,093,530 shares with this purchase.
- Chief Financial Officer Gunnar Wiedenfels acquired 25,000 shares, paying $19.95 per share for a total amount of $498,750. Mr. Wiedenfels increased his stake by 5.48% to 481,527 shares with this purchase.
- Chief Corp Affairs Officer David Leavy acquired 6,866 shares, paying $18.33 per share for a total amount of $125,854. Mr. Leavy increased his stake by 4.28% to 167,176 shares with this purchase.
You can view the list of recent insider transactions for Warner Bros. Discovery, Inc. here.
|P/E: 13.17||Forward P/E: 11.27||Industry P/E: 61.47|
|P/S: 3.61||Price/Book: 1.03||EV/EBITDA: 6.87|
|Market Cap: $44.05B||Avg. Daily Volume: 15,487,069||52 Week Range: $17.89 – $39.7|
3. Rocket Companies, Inc. (RKT): $8.85
Chief Executive Officer Jay Farner acquired 111,700 shares of this tech-driven real estate, mortgage, and e-Commerce company, paying $8.93 per share for a total amount of $998,019. Mr. Farner increased his stake by 6.17% to 1,922,407 shares with this purchase.
You can view the list of recent insider transactions for Rocket Companies, Inc. here.
|P/E: 3.81||Forward P/E: 6.97||Industry P/E: 7.49|
|P/S: 1.33||Price/Book: 1.68||EV/EBITDA: 4.24|
|Market Cap: $17.59B||Avg. Daily Volume: 5,522,155||52 Week Range: $8.49 – $23.33|
4. Lam Research Corporation (LRCX): $465.76
Director Catherine P. Lego acquired 1,736 shares of this semiconductor equipment & materials company, paying $460.35 per share for a total amount of $799,168. Ms. Lego increased her stake by 3.60% to 49,991 shares with this purchase.
You can view the list of recent insider transactions for Lam Research Corporation here.
|P/E: 14.52||Forward P/E: 12.25||Industry P/E: 23.39|
|P/S: 3.91||Price/Book: 10.09||EV/EBITDA: 12.14|
|Market Cap: $64.61B||Avg. Daily Volume: 1,404,279||52 Week Range: $449.5 – $731.85|
5. Lions Gate Entertainment Corp. (LGF.B): $12.57
Director Harry Sloan acquired 50,000 shares of this movies and TV shows production and distribution company, paying $12.72 per share for a total amount of $636,000.
You can view the list of recent insider transactions for Lions Gate Entertainment Corp. here.
|P/E: N/A||Forward P/E: 17.36||Industry P/E: 61.47|
|P/S: 0.80||Price/Book: 1.05||EV/EBITDA: 3.60|
|Market Cap: $2.91B||Avg. Daily Volume: 644,506||52 Week Range: $10.53 – $18.77|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Tesla, Inc. (TSLA): $870.76
Shares of Tesla were sold by 2 insiders:
- CEO Elon Musk sold 9,645,000 shares for $883.09, generating $8.52 billion from the sale.
- SVP Powertrain and Energy Eng. Andrew D. Baglino sold 3,500 shares for $899.42, generating $3.15 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 Tesla, Inc. here.
|P/E: 177.67||Forward P/E: 54.76||Industry P/E: 20.97|
|P/S: 16.76||Price/Book: 29.8||EV/EBITDA: 96.38|
|Market Cap: $902.12B||Avg. Daily Volume: 25,105,831||52 Week Range: $546.98 – $1243.49|
2. Airbnb, Inc. (ABNB): $153.21
Shares of Airbnb were sold by 3 insiders:
- Chairman of Airbnb.org Joseph Gebbia sold 454,168 shares for $153.16, generating $69.56 million from the sale. 15,525 of these shares were sold as a result of exercisng options immediately prior to the sale.
- Director Belinda J. Johnson sold 20,000 shares for $168.98, generating $3.38 million from the sale.
- Director Jeffrey D. Jordan sold 12,000 shares for $156.69, generating $1.88 million from the sale. These shares were sold indirectly by a trust.
You can view the list of recent insider transactions for Airbnb, Inc. here.
|P/E: N/A||Forward P/E: 75.47||Industry P/E: 2,585.66|
|P/S: 16.51||Price/Book: 20.33||EV/EBITDA: 171.24|
|Market Cap: $98.92B||Avg. Daily Volume: 5,737,847||52 Week Range: $129.71 – $212.584|
3. Snap Inc. (SNAP): $28.46
Shares of camera company were sold by 2 insiders:
- Chief Technology Officer Robert C. Murphy sold 900,000 shares for $29.55, generating $26.59 million from the sale.
- Chief Executive Officer Evan Spiegel sold 250,000 shares for $29.25, generating $7.31 million from the sale. These shares were sold indirectly by a trust.
You can view the list of recent insider transactions for Snap Inc. here.
|P/E: N/A||Forward P/E: 33.48||Industry P/E: 21.06|
|P/S: 11.31||Price/Book: 12.16||EV/EBITDA: -78.46|
|Market Cap: $46.57B||Avg. Daily Volume: 37,969,731||52 Week Range: $24.32 – $83.34|
4. Bentley Systems, Incorporated (BSY): $42.39
Director Raymond B. Bentley sold 631,387 shares of this infrastructure engineering software solutions provider for $42.23, generating $26.66 million from the sale.
You can view the list of recent insider transactions for Bentley Systems, Incorporated here.
|P/E: 141.3||Forward P/E: 46.58||Industry P/E: 53.96|
|P/S: 12.64||Price/Book: 31.9||EV/EBITDA: 85.15|
|Market Cap: $12.2B||Avg. Daily Volume: 954,217||52 Week Range: $34.45 – $71.92|
5. American Express Company (AXP): $174.71
Chairman and CEO Stephen J. Squeri sold 48,160 shares of American Express for $178.38, generating $8.59 million from the sale.
You can view the list of recent insider transactions for American Express Company here.
|P/E: 17.44||Forward P/E: 15.5||Industry P/E: 7.84|
|P/S: 3||Price/Book: 6||EV/EBITDA: N/A|
|Market Cap: $131.57B||Avg. Daily Volume: 4,025,590||52 Week Range: $149.89 – $199.55|
You can view the full list of sales from this Insider Sales page.
Disclaimer: I hold long positions in Rocket Companies (RKT) and Lions Gate Entertainment (LGF.A). 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.