Insider Weekends: Cluster Insider Purchase At Align Technology

One of the things I have really enjoyed over the last few weeks is reviewing insider purchases every night for our daily Event Driven Monitor series of posts. These nightly reviews surface small companies and small purchases that would otherwise be lost in the weekly aggregate data. For example, three of the top five purchases in our last Insider Weekends article were from regional banks. This week, the regional banks are missing from the list but that is primarily because the size of the purchases were smaller and not because the insiders were not buying.

The purchases this week brought up an interesting group of companies including some we have written about several times in the past. It was interesting to see that the CEO of new spinoff Biohaven (BHVN) continued buying stock as increasingly higher prices. I decided to close our position in the company and wrote the following in the October 2022 Mid-Month Update article,

Most pharma deals tend to close in relatively short periods and the Pfizer’s acquisition of Biohaven was no exception. The deal, which was announced in May 10, 2022 closed 146 days later on October 3, 2022. We discussed the deal in our May 2022 Mid-Month update when the stock was trading at $141, providing upside of $7.50 per share on the $148.50 per share all cash deal.

For every two old Biohaven shares you owned, you received one share of the new Biohaven (BHVN). The new Biohaven closed trading at $10.88 on Friday, enhancing returns for arbitrageurs from $7.50 a share to $12.94 per share, a return of 9.2% in less than five months. While I like the fact that a Director purchased shares before the close and the CEO purchased shares of the new Biohaven post-close, I have no idea how to value the pipeline of a pre-revenue biotech company and generally stay away from them. I will be selling my Biohaven spinoff shares in the coming days.

We also saw a cluster of purchases by the insiders at Align Technology (ALGN), the company that makes the clear dental aligners called Invisalign that are nearly ubiquitous at most dentist offices. We wrote about insider buying by the company’s CEO Joseph Hogan after he purchased $2 million worth of stock and wrote the following  in May of this year,

There have been very few insider purchases of Align but Mr. Hogan’s timing both with buying and selling has been impeccable. He last purchased $1 million worth of shares in August 2019 at an average price just below $200. He also sold $46.64 million worth of shares at an average price of $699.54 in August 2021. This was an opportunistic sale unrelated to any option exercises as you can see here.

CEO Joseph Hogan's Align Transactions

CEO Joseph Hogan’s Align Transactions (source: InsideArbitrage.com)

Like value investors, insiders tend to be early with their purchases and that was certainly the case with Mr. Hogan’s May 2022 purchase. It is good to see that he has continued buying and that two Directors joined him to buy stock on the open market. The company sports gross margins (>70%) that you would expect from a software company and is profitable on a GAAP basis unlike most SaaS companies. Revenue is however declining and analysts have revised their earnings estimates downwards in the last 90 days. I find the company very interesting but valuation remains a concern, especially considering the declining top line. Consumers are likely to delay expensive dental procedures and devices if we enter a recession, which appears increasingly likely next year. I’ll look into the company further as a potential candidate for our next monthly spotlight idea or mid-month update.

Welcome to edition 645 of Insider Weekends. Insider buying decreased last week with insiders purchasing $66.42 million of stock compared to $90.63 million in the week prior. Selling on the other hand increased significantly to $1.01 billion compared to $381.11 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 15.19. In other words, insiders sold more than 15 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 4.21.

Notable Insider Buys:

1. Charter Communications, Inc. (CHTR): $348.82

Director Eric Louis Zinterhofer acquired 27,202 shares of this cable services provider, paying $374.04 per share for a total amount of $10.17 million. Mr. Zinterhofer increased his stake by 138.09% to 46,901 shares with this purchase.

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

P/E: 10.84 Forward P/E: 9.5 Industry P/E: 15.76
P/S: 1.01 Price/Book: 6.11 EV/EBITDA: 7.22
Market Cap: $54.3B Avg. Daily Volume: 1,454,315 52 Week Range: $297.66 – $706.93

2. Biohaven Ltd. (BHVN): $15.47

Chief Executive Officer Vlad Coric acquired 167,730 shares of this biotech company, paying $15.01 per share for a total amount of $2.52 million. Mr. Coric increased his stake by 12.19% to 1,543,394 shares with this purchase. 100,000 of these shares were purchased indirectly by a 401(K) Plan.

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

P/E: N/A Forward P/E: -2.71 Industry P/E: 24.33
P/S: N/A Price/Book: N/A EV/EBITDA: N/A
Market Cap: $995.9M Avg. Daily Volume: 753,966 52 Week Range: $14.36 – $17.24

3. Align Technology, Inc. (ALGN): $180.93

Shares of this dental devices company were acquired by 3 insiders:

  • President and CEO Joseph M. Hogan acquired 10,600 shares, paying $188.58 per share for a total amount of $1.99 million. Mr. Hogan increased his stake by 6.06% to 185,401 shares with this purchase.
  • Director Anne Myong acquired 1,500 shares, paying $190.26 per share for a total amount of $285,385. Ms. Myong increased her stake by 45.54% to 4,794 shares with this purchase.
  • Director Warren S. Thaler acquired 1,050 shares, paying $191.21 per share for a total amount of $200,770. Mr. Thaler increased his stake by 3.55% to 30,666 shares with this purchase.

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

P/E: 27.17 Forward P/E: 22.48 Industry P/E: 24.33
P/S: 3.66 Price/Book: 3.82 EV/EBITDA: 15.08
Market Cap: $14.15B Avg. Daily Volume: 950,303 52 Week Range: $172.05 – $713.33

4. The Coca-Cola Company (KO): $59.26

Director Herbert A. Allen III acquired 33,200 shares of Coca-Cola, paying $60.18 per share for a total amount of $1.99 million. These shares were purchased indirectly by Allen & Company LLC.

You can view the list of recent insider transactions for The Coca-Cola Company here.

P/E: 25.99 Forward P/E: 23.52 Industry P/E: 20.78
P/S: 6.05 Price/Book: 11.24 EV/EBITDA: 21.13
Market Cap: $256.27B Avg. Daily Volume: 13,268,237 52 Week Range: $52.28 – $67.2

5. American Assets Trust, Inc. (AAT): $28.25

Chairman & CEO Ernest S. Rady acquired 70,000 shares of this diversified REIT, paying $27.81 per share for a total amount of $1.95 million. These shares were purchased indirectly by various trusts.

You can view the list of recent insider transactions for American Assets Trust, Inc. here.

P/E: 40.94 Forward P/E: 37.17 Industry P/E: N/A
P/S: 5.23 Price/Book: 1.39 EV/EBITDA: 14.02
Market Cap: $2.17B Avg. Daily Volume: 303,125 52 Week Range: $24.01 – $40.83

Notable Insider Sales:

1. Harmony Biosciences Holdings, Inc. (HRMY): $58.85

Shares of this commercial-stage pharmaceutical company were sold by 2 insiders:

  • Director Andreas Wicki sold 576,767 shares for $59.09, generating $34.08 million from the sale. These shares were sold indirectly by HBM Healthcare Investments.
  • Chief Medical Officer Jeffrey M. Dayno sold 30,000 shares for $57.56, generating $1.73 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 Harmony Biosciences Holdings, Inc. here.

P/E: 61.3 Forward P/E: 22.29 Industry P/E: 24.33
P/S: N/A Price/Book: 14.11 EV/EBITDA: N/A
Market Cap: $3.48B Avg. Daily Volume: 526,809 52 Week Range: $31.538 – $60.66

2. O’Reilly Automotive, Inc. (ORLY): $815.74

Shares of this retailer and supplier of automotive aftermarket parts were sold by 6 insiders:

  • EV Chairman of the Board David E. O’Reilly sold 25,000 shares for $834.98, generating $20.87 million from the sale. These shares were sold indirectly by a trust.
  • EVP Thomas McFall sold 6,862 shares for $834.02, generating $5.72 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • CEO & President Gregory D. Johnson sold 4,716 shares for $832.25, generating $3.92 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • SVP of HR & Training Jonathan Wyatt Andrews sold 2,500 shares for $835.64, generating $2.09 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • SVP of Information Technology Jeffrey Alan Lauro sold 1,000 shares for $817.00, generating $817,000 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Thomas Hendrickson sold 310 shares for $834.16, generating $258,588 from the sale.

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

P/E: 25.02 Forward P/E: 22.09 Industry P/E: 12.35
P/S: 3.64 Price/Book: N/A EV/EBITDA: 17.78
Market Cap: $51.23B Avg. Daily Volume: 481,404 52 Week Range: $562.9 – $845.24

3. Airbnb, Inc. (ABNB): $96.09

Shares of Airbnb were sold by 2 insiders:

  • Director Joseph Gebbia sold 261,636 shares for $113.21, generating $29.62 million from the sale. 11,636 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Technology Officer Aristotle N. Balogh sold 2,500 shares for $111.00, generating $277,500 from the sale.

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

P/E: 46.87 Forward P/E: 34.07 Industry P/E: 12.35
P/S: 7.58 Price/Book: 10.98 EV/EBITDA: 31.82
Market Cap: $60.84B Avg. Daily Volume: 5,989,623 52 Week Range: $86.71 – $212.584

4. Apple Inc. (AAPL): $138.38

Senior Vice President, CFO Luca Maestri sold 176,299 shares of Apple for $155.95, generating $27.49 million from the sale.

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

P/E: 22.65 Forward P/E: 20.29 Industry P/E: 20.64
P/S: 5.58 Price/Book: 43.54 EV/EBITDA: 17.51
Market Cap: $2.2T Avg. Daily Volume: 86,759,142 52 Week Range: $129.04 – $182.94

5. The Charles Schwab Corporation (SCHW): $79.05

Shares of Charles Schwab were sold by 5 insiders:

  • Co-Chairman Charles R. Schwab sold 137,160 shares for $79.50, generating $10,903,568 from the sale. These shares were sold indirectly by a trust.
  • Director Carolyn Schwab-Pomerantz sold 44,490 shares for $79.88, generating $3,553,835 from the sale. These shares were sold indirectly by a trust.
  • MD, EVP – Corporate Risk Nigel J. Murtagh sold 16,169 shares for $80.00, generating $1,293,444 from the sale.
  • MD, EVP, and General Counsel Peter J. Morgan III sold 7,322 shares for $80.03, generating $585,968 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Managing Director, Head of Investor Services and Marketing Jonathan M. Craig sold 4,019 shares for $79.07, generating $317,802 from the sale.

You can view the list of recent insider transactions for The Charles Schwab Corporation here.

P/E: 23.95 Forward P/E: 16.33 Industry P/E: 10.82
P/S: 7.51 Price/Book: 4.03 EV/EBITDA: N/A
Market Cap: $149.96B Avg. Daily Volume: 7,689,689 52 Week Range: $59.35 – $96.24

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.

Leave A Comment

You must be logged in to post a comment.