Insider Weekends: ICONIQ Makes A Brazen Purchase

Key purchases this week come from familiar names, especially with August J. Troendle (CEO of Medpace Holdings) making yet another large purchase totaling $62.49 million. This follows a series of purchases last week that totaled $57.2 million, which we mentioned in our Insider Weekends post last week. We also picked Medpace as our spotlight idea for our August 2022 Special Situations Newsletter, on account of insider purchases by Mr. Troendle this year. We added the stock to our watch list because we wanted to see a better entry price. With the recent pullback in the stock, it looks like we are getting there. These trades stood out because until January of this year, Mr. Troendle was a seller of Medpace stock. He waited just a little over six months to get out of the short-swing rule window before buying stock.

Norton LifeLock is yet another company that we’ve frequently discussed on InsideArbitrage, first adding it to our portfolio as part of the June 2021 Special Situations Newsletter, and later exiting the position in November 2021. When exiting the position, we wrote the following,

The company announced a massive $8 billion+ acquisition of Avast shortly after we wrote about the company and this changes the nature of the investment. Under different market conditions, I would have been willing to be patient to see how the integration between the two companies might work out but this is a time for action and I would rather exit the position.

The recent purchase of Norton LifeLock’s stock came from President Ondrej Vlcek and totaled $9.99 million. Mr. Vlcek previously served as the CEO of Avast, the European cyber security software company that merged with Norton LifeLock. The company’s margins are excellent but growth is tepid, with year-over-year revenue growth hovering at 7.40%, and forward growth expected to come in at 6.17%.

Another key purchase for this week comes from ICONIQ Strategic Partners. We mentioned ICONIQ in March 2022 following their purchase of Procore Technologies (PCOR) and wrote the following,

ICONIQ is a San Francisco-based private asset management company with $83.5 billion in assets under management (as of 12/31/2021). The firm provides wealth management services to high net worth clients such as Mark Zuckerberg, Sheryl Sandberg, Jack Dorsey and Jeff Weiner. ICONIQ was founded by Divesh Makan, Michael Anders and Chad Boeding in 2011 and Will Griffith joined the firm in 2012. ICONIQ has been a 10% owner in various companies like Snowflake (SNOW), Fastly (FSLY), Datadog (DDOG) and Procore Technologies (PCOR).

ICONIQ is adding to their position in another technology company, Braze Inc. (BRZE) and purchased $15.79 million of the company’s stock. The stock is down more than 63% over the last year. Braze is a marketing service for companies that specifically focuses on optimizing customer engagement in a variety of ways, including taking in data from customers and using that to create precise notifications and messages. Companies ranging from HBO Max to Grubhub have used Braze’s services to improve their businesses as you can see from the success stories on their website.

It looks like two different Directors of Braze, Matthew Jacobson and Douglas Pepper, purchased shares. However the purchases were duplicate purchases and both did so indirectly through ICONIQ. When looking at the financials of Braze, we see that the gross profit margin is 67.38%, and year-over-year revenue growth was an impressive 60.32%. Braze went public in November 17, 2021 at a valuation of $5.9 billion. The company closed its first day of trading at $93.39 and has declined to its current price of $34.31. While the company is growing rapidly, this is yet another technology company that is unfortunately both unprofitable and has negative cash flow even after adjusting for share based compensation. During the trailing twelve months, the company posted a net loss of $123.8  million, and cash from operations was negative to the tune of $25.4 million.

While ICONIQ is buying shares, members of the C-Suite have been selling despite the big decline in the stock price. ICONIQ also purchased shares of Braze earlier this year in April, as well as just a few days after the company went public. I want to see other insiders step up to buy shares and a pathway to positive free cash flow before I would get interested, especially in an environment where companies are cutting back on their marketing spend.

Welcome to edition 638 of Insider Weekends. Insider buying increased last week with insiders purchasing $190.12 million of stock compared to $189.95 million in the week prior. Selling on the other hand decreased to $504.72 million compared to $902.53 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 dropped to 2.65. In other words, insiders sold almost 3 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 4.75.

Notable Insider Buys:

1. Medpace Holdings, Inc. (MEDP): $145.38

CEO August J. Troendle acquired 402,299 shares of this clinical research-based drug and medical device development services provider, paying $155.33 per share for a total amount of $62.49 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: 25.37 Forward P/E: 22.47 Industry P/E: 23.45
P/S: 3.5 Price/Book: 15.86 EV/EBITDA: 20.28
Market Cap: $4.51B Avg. Daily Volume: 332,214 52 Week Range: $126.945 – $231

2. Braze, Inc. (BRZE): $34.31

Director Matthew Jacobson acquired 450,884 shares of this customer engagement platform, paying $35.03 per share for a total amount of $15.79 million. These shares were purchased indirectly by ICONIQ Strategic Partners VI, L.P.

You can view the list of recent insider transactions for Braze, Inc. here.

P/E: N/A Forward P/E: -57.18 Industry P/E: 20.59
P/S: 10.94 Price/Book: 6.91 EV/EBITDA: -22.3
Market Cap: $3.26B Avg. Daily Volume: 626,346 52 Week Range: $27.09 – $98.78

3. NortonLifeLock Inc. (NLOK): $20.67

President Ondrej Vlcek acquired 456,475 shares of this cyber safety solutions provider, paying $21.91 per share for a total amount of $9.99 million. Mr. Vlcek increased his stake by 15.23% to 3,453,198 shares with this purchase.

You can view the list of recent insider transactions for NortonLifeLock Inc. here.

P/E: 14.45 Forward P/E: 10.6 Industry P/E: 20.59
P/S: 4.88 Price/Book: N/A EV/EBITDA: 11.04
Market Cap: $13.76B Avg. Daily Volume: 5,763,976 52 Week Range: $20.44 – $30.92

4. Empire Petroleum Corporation (EP): $12.81

Director Phil E. Mulacek acquired 138,235 shares of this oil and gas exploration & production company, paying $11.83 per share for a total amount of $1.64 million. Mr. Mulacek increased his stake by 6.21% to 2,362,634 shares with this purchase.

You can view the list of recent insider transactions for Empire Petroleum Corporation here.

P/E: N/A Forward P/E: N/A Industry P/E: 8.93
P/S: 5.87 Price/Book: 12.03 EV/EBITDA: 17.16
Market Cap: $277.78M Avg. Daily Volume: 66,549 52 Week Range: $6.36 – $24.9

5. APi Group Corporation (APG): $13.96

Director Anthony E. Malkin acquired 92,145 shares of this safety, specialty, and industrial services provider, paying $15.15 per share for a total amount of $1.39 million. 59,952 of these shares were purchased indirectly by an LLC.

You can view the list of recent insider transactions for APi Group Corporation here.

P/E: N/A Forward P/E: 9.12 Industry P/E: 16.73
P/S: 0.64 Price/Book: 1.12 EV/EBITDA: 15.03
Market Cap: $3.36B Avg. Daily Volume: 878,953 52 Week Range: $13.765 – $26.84

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Royalty Pharma plc (RPRX): $40.33

Director Mario Germano Giuliani sold 911,013 shares of this biotech company for $41.29, generating $37.62 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Royalty Pharma plc here.

P/E: 39.54 Forward P/E: 11.42 Industry P/E: 23.45
P/S: 12.07 Price/Book: 2.93 EV/EBITDA: 24.81
Market Cap: $27.26B Avg. Daily Volume: 1,858,611 52 Week Range: $34.86 – $44.75

2. BeiGene, Ltd. (BGNE): $138.64

Chief Executive Officer John Oyler sold 50,000 shares of this biotech company for $152.13, generating $7.61 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for BeiGene, Ltd. here.

P/E: N/A Forward P/E: -12.41 Industry P/E: 23.45
P/S: 13.6 Price/Book: 2.71 EV/EBITDA: -5.32
Market Cap: $14.53B Avg. Daily Volume: 232,041 52 Week Range: $118.18 – $392.3

3. Morningstar, Inc. (MORN): $215.82

Executive Chairman Joseph D. Mansueto sold 22,060 shares of Morningstar for $225.10, generating $4.97 million from the sale.

You can view the list of recent insider transactions for Morningstar, Inc. here.

P/E: 51.51 Forward P/E: 28.93 Industry P/E: N/A
P/S: 5.04 Price/Book: 7.39 EV/EBITDA: 29.2
Market Cap: $9.17B Avg. Daily Volume: 94,106 52 Week Range: $211.58 – $350.21

4. Toast, Inc. (TOST): $17.66

Chief Executive Officer Christopher P. Comparato sold 162,290 shares of this cloud-based and digital technology platform for $18.95, generating $3.08 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Toast, Inc. here.

P/E: N/A Forward P/E: -73.58 Industry P/E: 20.59
P/S: 4.13 Price/Book: 7.88 EV/EBITDA: -22.93
Market Cap: $9.12B Avg. Daily Volume: 5,194,722 52 Week Range: $11.91 – $69.93

5. HubSpot, Inc. (HUBS): $272.81

Executive Chair Brian Halligan sold 8,500 shares of this cloud-based customer relationship management (CRM) platform for $286.00, generating $2.43 million from the sale.

You can view the list of recent insider transactions for HubSpot, Inc. here.

P/E: N/A Forward P/E: 94.07 Industry P/E: 20.59
P/S: 8.59 Price/Book: 14.99 EV/EBITDA: -198.86
Market Cap: $13.1B Avg. Daily Volume: 724,768 52 Week Range: $257.21 – $866

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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