Welcome to edition 636 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $436.83 million of stock compared to $37.62 million in the week prior. Selling also increased to $631.78 million compared to $582.18 million in the week prior.
A majority of this increase in insider buying was driven by a large purchase of project management software company Asana (ASAN) by its CEO Dustin Moskovitz in a private placement. The company issued new shares to Mr. Moskovitz at a price of $18.16 per share to generate $350 million for working capital and other corporate purposes. About a year ago, Mr. Moskovitz was actively purchasing shares of Asana at prices sometimes approaching $100 per share. Despite the nearly 34% gain in the stock during the last five days after the company released earnings that beat expectations, the stock is still down 75% over the last year as the company continues to post losses and growth decelerates.
Unlike certain SaaS companies that post net losses but are cash flow positive, Asana is posting negative cash flows having burnt through $164 million in cash during the trailing twelve months. At this rate, the company would have been out of cash in a year. This cash from the private placement allows the company to extend its runway as it continues to prioritize revenue growth over bottom line profitability. I wrote the following about the company in June 2021 after a series of insider purchases by Mr. Moskovitz.
Dustin Moskovitz is one of the co-founders of Facebook, making him the youngest self-made billionaire in history in 2011. He co-founded the productivity software company, Asana, in 2008 and the company went public through a direct listing on September 30, 2020. The “reference price” for the direct listing was $21 and it closed its first day of trading at $28.80. It has more than doubled from that first day close to $62.73.
While it is unusual for insiders of a newly public company to buy shares as we highlighted with the Bumble purchases, it is even more unusual to see an insider buy shares multiple times though a defined trading plan (a 10b5-1 plan) as we have seen with Mr. Moskovitz since June 2021. The stock is already up more than $20 a share since he started buying shares. Asana’s market cap is a little over $10 billion and Mr. Moskovitz’s net worth is estimated to be over $21 billion.
There are many productivity software companies out there including Monday.com, Smartsheet (SMAR) and Atlassian (TEAM). I was an early adopter of Smartsheet (before Office 365 made Excel online a viable competitor), have held Atlassian shares for several years and nearly two decades ago wrote most of the code for an online project management module in an enterprise software application that is still in use. The barriers to entry appear low from the outside but the highly competitive nature of this industry makes it difficult for new entrants to gain enough traction to unseat incumbents unless the product is sufficiently unique or there is a lot of capital backing the company.
This Twitter thread by the CEO of a company that was an Asana competitor provides a fascinating inside look into just how competitive this little area of the software industry can be. The thread is long but the screenshot below is the money shot as it relates to Asana and Mr. Moskovitz.
Given the nature of this little niche and Asana’s valuation (31 times estimated 2021 sales), I would prefer to watch how the Asana story unfolds from the sidelines despite Mr. Moskovitz’s enthusiasm for the stock.
Asana’s valuation has come down to earth since I wrote that article last year and the stock now trades at 9.55 forward sales instead of the 31 times sales it was trading at last year. I still can’t muster enough enthusiasm for the stock as there are several other high growth technology companies that have dropped to valuations that make them look attractive at current levels including our portfolio companies Twilio (TWLO) and Coursera (COUR). I’ll continue to monitor Asana to see if the company can become a true platform company and if the market offers it at more attractive levels.
It was interesting to see additional insider buying in Medpace Holdings (MEDP), a company which was the spotlight idea in our August 2022 Special Situations newsletter and that we added to our watchlist last month.
Another company with insider purchases we have mentioned in the past is American Homes 4 Rent (AMH), a REIT that focuses on renting single family homes. I bought AMH several years ago following insider purchases by B. Wayne Hughes, the founder of both Public Storage (PSA) and AMH. I scaled back my exposure to AMH in recent weeks because of concerns about weakness in housing and the impact of high interest rates on REITs. It looks like Mr. Hughes’ daughter Tamara Hughes Gustavson does not share my concerns as she picked up over $15 million worth of stock last week. With an estimated net worth north of $8 billion, this purchase is a drop in the bucket for her but it was interesting to see her buy shares again after a several month hiatus.
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 dropped to 1.45. In other words, insiders sold almost 2 times as much stock as they purchased. The Sell/Buy ratio this week was favorable compared to the prior week when the ratio stood at 15.47.
Notable Insider Buys:
1. Asana, Inc. (ASAN): $24.66
President, CEO, & Chair Dustin A. Moskovitz acquired 19,273,127 shares of this work management platform, paying $18.16 per share for a total amount of $349.99 million. Mr. Moskovitz increased his stake by 97.14% to 39,112,803 shares with this purchase.
You can view the list of recent insider transactions for Asana, Inc. here.
|P/E: N/A||Forward P/E: -26.52||Industry P/E: 22.53|
|P/S: 11.11||Price/Book: 30.07||EV/EBITDA: -11.15|
|Market Cap: $4.69B||Avg. Daily Volume: 3,523,033||52 Week Range: $16.19 – $145.79|
2. Medpace Holdings, Inc. (MEDP): $163.09
CEO August J. Troendle acquired 203,904 shares of this clinical research-based drug and medical device development services provider, paying $147.20 per share for a total amount of $30.01 million. These shares were purchased indirectly by Medpace Investors.
You can view the list of recent insider transactions for Medpace Holdings, Inc. here.
|P/E: 28.92||Forward P/E: 25.21||Industry P/E: 26.64|
|P/S: 3.93||Price/Book: 17.79||EV/EBITDA: 19.39|
|Market Cap: $5.06B||Avg. Daily Volume: 311,451||52 Week Range: $126.945 – $231|
3. American Homes 4 Rent (AMH): $37.05
Director Tamara Hughes Gustavson acquired 422,203 shares of this residential REIT, paying $36.55 per share for a total amount of $15.43 million. These shares were purchased indirectly by various entities.
You can view the list of recent insider transactions for American Homes 4 Rent here.
|P/E: 65||Forward P/E: 65||Industry P/E: N/A|
|P/S: 10.61||Price/Book: 2.05||EV/EBITDA: 25.88|
|Market Cap: $14.81B||Avg. Daily Volume: 2,111,611||52 Week Range: $32.6 – $44.07|
4. Douglas Emmett, Inc. (DEI): $21.26
Shares of this office and apartment REIT were acquired by 3 insiders:
You can view the list of recent insider transactions for Douglas Emmett, Inc. here.
|P/E: 43.39||Forward P/E: 30.81||Industry P/E: N/A|
|P/S: 4.58||Price/Book: 1.47||EV/EBITDA: 16.85|
|Market Cap: $4.39B||Avg. Daily Volume: 1,337,070||52 Week Range: $18.99 – $36.97|
5. DISH Network Corporation (DISH): $19.33
Director James DeFranco acquired 110,000 shares of DISH Network, paying $16.73 per share for a total amount of $1.84 million. These shares were purchased indirectly by a 401(K) plan.
You can view the list of recent insider transactions for DISH Network Corporation here.
|P/E: 5.98||Forward P/E: 14.87||Industry P/E: 16.36|
|P/S: 0.59||Price/Book: 0.62||EV/EBITDA: 9.02|
|Market Cap: $10.25B||Avg. Daily Volume: 3,686,738||52 Week Range: $16.2 – $46.31|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. PTC Inc. (PTC): $119.97
Director Blake D. Moret sold 355,824 shares of this software and services company for $117.14, generating $41.68 million from the sale. These shares were sold indirectly by Rockwell Automation.
You can view the list of recent insider transactions for PTC Inc. here.
|P/E: 28.91||Forward P/E: 22.42||Industry P/E: N/A|
|P/S: 7.39||Price/Book: 6.53||EV/EBITDA: 30.14|
|Market Cap: $14.09B||Avg. Daily Volume: 755,930||52 Week Range: $96.55 – $136|
2. Royalty Pharma plc (RPRX): $43.63
Director Mario Germano Giuliani sold 499,500 shares of this biotech company for $42.70, generating $21.33 million from the sale. These shares were sold indirectly by Avara Management.
You can view the list of recent insider transactions for Royalty Pharma plc here.
|P/E: 42.36||Forward P/E: 12.68||Industry P/E: 26.64|
|P/S: 12.86||Price/Book: 3.16||EV/EBITDA: 26.01|
|Market Cap: $29.06B||Avg. Daily Volume: 1,972,391||52 Week Range: $34.86 – $44.75|
3. Microsoft Corporation (MSFT): $264.46
EVP, Chief Financial Officer Amy Hood sold 75,351 shares of Microsoft for $259.47, generating $19.55 million from the sale.
You can view the list of recent insider transactions for Microsoft Corporation here.
|P/E: 27.41||Forward P/E: 22.15||Industry P/E: 22.53|
|P/S: 9.72||Price/Book: 11.85||EV/EBITDA: 19.86|
|Market Cap: $1.93T||Avg. Daily Volume: 24,992,435||52 Week Range: $241.51 – $349.67|
4. System1, Inc. (SST): $10.93
Director Christopher Stephen Phillips sold 1,320,042 shares of this technology & data science company for $10.03, generating $13.24 million from the sale. These shares were sold indirectly by Just Develop It Limited.
You can view the list of recent insider transactions for System1, Inc. here.
|P/E: 45.54||Forward P/E: 11.27||Industry P/E: 0.50|
|P/S: 1.22||Price/Book: 1.54||EV/EBITDA: 50.71|
|Market Cap: $990.19M||Avg. Daily Volume: 319,353||52 Week Range: $6.57 – $37.1|
5. Molina Healthcare, Inc. (MOH): $348.23
Shares of this managed health care services provider were sold by 3 insiders:
You can view the list of recent insider transactions for Molina Healthcare, Inc. here.
|P/E: 26.85||Forward P/E: 17.47||Industry P/E: 26.64|
|P/S: 0.69||Price/Book: 7.14||EV/EBITDA: 10.92|
|Market Cap: $20.23B||Avg. Daily Volume: 403,393||52 Week Range: $249.78 – $361.25|
You can view the full list of sales from this Insider Sales page.
Disclaimer: I hold a long position in American Homes 4 Rent (AMH). 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.