When working through the list of insider purchases and sales each week, we tend to remove transactions by 10% owners that are not part of the management team and that don’t have representation on the Board of Directors. This week, we decided to make an exception to highlight a purchase of Ecolab (ECL) by Cascade Investment LLC, which is the private investment firm that manages Bill Gates’ wealth. Cascade has been the largest shareholder of Ecolab since 2011 and their last purchase was in March 2018.
Ecolab, a company with annual sales of $13 billion and more than 47,000 employees, provides water, hygiene and infection prevention solutions through hundreds of products that can range from commercial dishwashing machines to cleanroom disinfectants. The company has been paying a dividend for 85 consecutive years and currently yields 1.2% with a 44% payout ratio. Ecolab was hit hard during the pandemic with multiple quarters of double digit revenue declines. The company has recovered since then with revenue growing 13.21% last quarter but neither revenue nor earning are back to pre-pandemic levels. In fact, both gross margins and earnings have taken a hit in recent quarters on account on inflation. Trading at a forward P/E of 36, it is surprising to see to Cascade buy more of Ecolab after not adding to their stake for more than four years.
The bigger news with insider transactions last week was Ryan Cohen deciding to sell his entire stake in Bed, Bath & Beyond Inc. (BBBY) after a very big jump in the money losing company’s stock. I wrote the following about Gamestop and Mr. Cohen in our Return of the Meme Stocks article earlier this year,
In a re-run of a movie we have seen before, the “meme stocks” GameStop (GME) and AMC Entertainment (AMC) saw their stocks surge last week with GameStop registering a gain of over 67% for the week and AMC delivering gains of 28% in a single week. While three different insiders of GameStop purchased shares as discussed below, AMC saw continued insider selling.
The billionaire founder of online pet retailer Chewy, Ryan Cohen, became the chairman of GameStop in April 2021 and brought along other Chewy executives and investors to join the GameStop board. Alain Attal, who purchased 1,500 shares of GameStop was previously the Chief Marketing Officer of Chewy. Lawrence Cheng, a Managing Partner of Volition Capital, purchased 4,000 shares of GameStop. Volition Capital was an early investor in Chewy, putting $15 million into the company after Ryan Cohen was rejected by over 100 venture capital firms. Chewy sold to PetSmart in April 2017 for $3.35 billion.