Insider Weekends: Greg Abel Reinvests Payout Into Berkshire Hathaway

The group of insider transactions we saw last week were an eclectic mix including insider buying in a recent spinoff (Biohaven), buying in a battered marketing software company (Braze) and buying in a SPAC (Chardan NexTech Acquisition 2) that acquired a lithium-ion battery supplier. Unlike most SPACs that drop sharply after a business combination with an operating company, this one not only held up above the $10 level, it appreciated significantly following insider buying.

We saw the same thing with “new” Biohaven, which saw its stock rise after the completion of the acquisition of “old” Biohaven by Pfizer. Following the acquisition, Pfizer decided to retain the migraine related drugs and spinoff the rest of the drug pipeline into a new company that retained the Biohaven name, its stock symbol BHVN, its Board of Directors and its CEO, Vlad Coric. The spinoff also received $258 million in cash and is entitled to royalty payments if the migraine related drugs Pfizer acquired exceed certain milestones ($5.25 billion in annual sales) as discussed in our May 2022 article about the merger and spinoff.

The probability of receiving royalty payments is low and insiders appear to excited by the pipeline prospects for the new Biohaven drugs that target epilepsy, pain and mood disorders, obsessive compulsive disorder (OCD), spinocerebellar ataxia (SCA) and spinal muscular atrophy (SMA). Pfizer will own a 3% stake in new Biohaven and it would not be surprising to see them invest more in the company as they did with their $350 million investment in the old Biohaven in 2021.

We also saw Warren Buffett’s successor and the Vice Chair of Berkshire Hathaway, Greg Abel, invest $68.33 million in its class A shares. Mr. Abel received $870 million in June after Berkshire acquired his stake in Berkshire Hathaway Energy. I had picked Berkshire Hathaway as my top pick for 2021 and despite the recent pullback, it is still up about 17% from those levels. I would not mind buying Berkshire at those levels again if I see the stock pull back an additional 10% to 20%. The stock currently trades for 1.3 times book value. Berkshire used to buyback its stock when it dipped below 1.2 times book value before abandoning that metric. Book value for Berkshire Hathaway is likely understated considering the large number of operating businesses it owns that are not public companies.

Welcome to edition 640 of Insider Weekends. Insider buying increased last week with insiders purchasing $110.88 million of stock compared to $39.43 million in the week prior. Selling also increased to $499.74 million compared to $238.37 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 4.51. In other words, insiders sold almost 5 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 6.05.

Notable Insider Buys:

1. Berkshire Hathaway Inc. (BRK.A): $406,010

Vice Chair Gregory Abel acquired 168 shares of Berkshire, paying $406,729.53 per share for a total amount of $68.33 million. These shares were purchased indirectly through a trust.

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

P/E: 55.50 Forward P/E: 19.16 Industry P/E: 10.03
P/S: 2.35 Price/Book: 1.34 EV/EBITDA: N/A
Market Cap: $594.39B Avg. Daily Volume: 2,515 52 Week Range: $395,202.00 – $544,389.00

2. Braze, Inc. (BRZE): $35.62

Director Matthew Jacobson acquired 502,378 shares of this customer engagement platform, paying $34.71 per share for a total amount of $17.44 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: -59.37 Industry P/E: 19.89
P/S: 11.36 Price/Book: 7.17 EV/EBITDA: -23.28
Market Cap: $3.39B Avg. Daily Volume: 597,451 52 Week Range: $27.09 – $98.78

3. Chardan NexTech Acquisition 2 Corp. (CNTQ): $14

CEO, President, Secretary & Treasurer Jonas Grossman acquired 485,000 shares of this SPAC, paying $10.36 per share for a total amount of $5.02 million. These shares were purchased indirectly by Chardan Capital Markets LLC.

You can view the list of recent insider transactions for Chardan NexTech Acquisition 2 Corp. here.

P/E: 66.67 Forward P/E: N/A Industry P/E: 86.75
P/S: N/A Price/Book: N/A EV/EBITDA: N/A
Market Cap: $95.34M Avg. Daily Volume: 73,989 52 Week Range: $9.93 – $27.95

4. Biohaven Ltd. (BHVN): $12.89

Shares of this biotech company were acquired by 2 insiders:

  • Chief Executive Officer Vlad Coric acquired 485,775 shares, paying $10.31 per share for a total amount of $5.01 million.
  • Director John W. Childs acquired 274,141 shares, paying $8.98 per share for a total amount of $2.46 million. Mr. Childs increased his stake by 18.07% to 1,791,251 shares with this purchase.

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

P/E: N/A Forward P/E: -1.94 Industry P/E: 23.76
P/S: N/A Price/Book: N/A EV/EBITDA: N/A
Market Cap: $923.5M Avg. Daily Volume: 803,095 52 Week Range: $12.75 – $152.56

5. THOR Industries, Inc. (THO): $72.4

Director Peter Busch Orthwein acquired 20,000 shares of this recreational vehicles company, paying $72.50 per share for a total amount of $1.45 million. These shares were purchased indirectly through a trust.

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

P/E: 3.52 Forward P/E: 8.44 Industry P/E: 11,61
P/S: 0.24 Price/Book: 1.08 EV/EBITDA: 2.97
Market Cap: $3.89B Avg. Daily Volume: 782,482 52 Week Range: $66.26 – $125.72

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

Notable Insider Sales:

1. Alphabet Inc. (GOOG): $99.57

Shares of Alphabet were sold by 3 insiders:

  • SVP, Chief Business Officer Philipp Schindler sold 76,678 shares for $100.80, generating $7.73 million from the sale.
  • President, Global Affairs, CLO John Kent Walker sold 34,809 shares for $100.00, generating $3.48 million from the sale. These shares were sold indirectly by various trusts.
  • VP, Chief Accounting Officer Amie Thuener O’Toole sold 855 shares for $101.04, generating $86,389 from the sale.

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

P/E: 19.04 Forward P/E: 16.85 Industry P/E: 14.53
P/S: 4.65 Price/Book: 5.1 EV/EBITDA: 12.41
Market Cap: $1.29T Avg. Daily Volume: 24,255,982 52 Week Range: $96.03 – $152.1

2. SolarEdge Technologies, Inc. (SEDG): $209.62

Director More Avery sold 79,000 shares of this solar company for $120.70, generating $9.54 million from the sale.

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

P/E: 82.85 Forward P/E: 23.06 Industry P/E: 19.89
P/S: 4.74 Price/Book: 5.75 EV/EBITDA: 52.95
Market Cap: $11.66B Avg. Daily Volume: 1,062,748 52 Week Range: $200.86 – $389.71

3. Palo Alto Networks, Inc. (PANW): $169.91

Shares of this cybersecurity platform were sold by 2 insiders:

  • EVP, Chief Technology Officer Nir Zuk sold 36,000 shares for $168.45, generating $6.06 million from the sale.
  • Chief Accounting Officer Josh D. Paul sold 735 shares for $170.07, generating $125,001 from the sale.

You can view the list of recent insider transactions for Palo Alto Networks, Inc. here.

P/E: N/A Forward P/E: 44.71 Industry P/E: 19.89
P/S: 9.24 Price/Book: 241.69 EV/EBITDA: 1631.21
Market Cap: $50.84B Avg. Daily Volume: 4,056,889 52 Week Range: $140.517 – $213.633

4. Keurig Dr Pepper Inc. (KDP): $36.5

Executive Chairman Robert James Gamgort sold 125,000 shares of this beverage company for $36.10, generating $4.51 million from the sale.

You can view the list of recent insider transactions for Keurig Dr Pepper Inc. here.

P/E: 24.01 Forward P/E: 19.84 Industry P/E: 19.48
P/S: 3.89 Price/Book: 2.04 EV/EBITDA: 17.99
Market Cap: $51.69B Avg. Daily Volume: 7,017,373 52 Week Range: $33.35 – $41.31

5. O’Reilly Automotive, Inc. (ORLY): $710.77

EV Chairman of the Board David E. O’Reilly sold 4,800 shares of this automotive aftermarket parts retailer for $726.78, generating $3.49 million from the sale.

You can view the list of recent insider transactions for O’Reilly Automotive, Inc. here.

P/E: 23.14 Forward P/E: 20.02 Industry P/E: N/A
P/S: 3.28 Price/Book: N/A EV/EBITDA: 15.84
Market Cap: $45B Avg. Daily Volume: 455,232 52 Week Range: $562.9 – $750.88

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: I own long positions in Berkshire Hathaway and Biohaven. 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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