CEO and CFO of Align Technology Purchase Shares – Insider Weekends

This week, the largest purchases were made by insiders of the mid-market investment bank B. Riley (RILY). As discussed briefly in our last Event Driven Monitor, B. Riley’s stock dropped sharply last week following the release of a short seller report. We will be discussing B. Riley and this short seller report in more detail in our February Mid-Month Update later this week.

For this insider weekends article, we will be focusing on a company that just barely missed our list of top 5 insider purchases, Align Technology Inc. (ALGN), best known for developing Invisalign, an alternative to the traditional dental braces.

Align Technology has stood out to us in the past due to its insider transactions. During the pandemic, Align’s stock price skyrocketed, hitting highs of well above $700. Nearly all insider transactions by Align executives and Directors from 2020 to 2021 were sales, with the exception of a few option exercises:

As a result, when we saw insiders begin to purchase shares in 2022, we thought a closer look at the company was warranted. When Align’s CEO, Joseph Hogan, purchased nearly $2 million worth of shares, we wrote the following in a May 2022 Insider Weekends Article:

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.

While the amount Mr. Hogan purchased was nowhere close to the amount he had previously sold, we did like the fact that Mr. Hogan timing was excellent, picking up shares before the large run-up in stock price and selling before the subsequent steep fall. In November 2022, we saw another purchase by Mr. Hogan, and we wrote the following in our Insider Weekends post for that week:

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.

Since the purchases made by Mr. Hogan and the Directors in November 2022, the stock has rebounded by 65% – an impressive increase considering challenging market conditions. What makes things even more interesting is that Mr. Hogan chose to purchase stock once again last week (albeit a smaller purchase of $1 million), as did the CFO of the company, despite the run up in the stock price.

While we do like to see continued insider confidence in a stock (especially considering their excellent timing in the past), we also like to see the financials to back it up. While the gross margins have still stayed at the attractive 70% level, growth has definitely slowed, with revenue actually decreasing in the last year. Net income also declined significantly from 2021 to 2022, dropping to $361.6 million – nearly half of what it was in 2021, and a fraction of the $1.78 billion recorded in 2020. The company’s valuation doesn’t reflect this, as Align currently has a P/E value of 43.74 and a EV/EBITDA value of 30.54.

Insiders clearly have a variant perception from ours and given that we missed the prior 65% increase in the stock after his last purchase, we will take a closer look this time to see if the stock meets our criteria for inclusion as a spotlight idea in the March 2023 Special Situations newsletter.

Welcome to edition 659 of Insider Weekends. Insider buying decreased last week with insiders purchasing $43.73 million of stock compared to $119.38 million in the week prior. Selling on the other hand increased to $1.34 billion compared to $819.34 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 30.64 In other words, insiders sold almost 31 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 6.87.

Notable Insider Buys:

1. B. Riley Financial, Inc. (RILY): $40.78

Shares of B. Riley Financial were acquired by 4 insiders:

• Chairman and Co-CEO Bryant R. Riley acquired 135,923 shares, paying $40.18 per share for a total amount of $5.46 million. Mr. Riley increased his stake by 2.18% to 6,375,943 shares with this purchase.
• CEO B. Riley Securities, Inc. Andrew Moore acquired 80,000 shares, paying $38.75 per share for a total amount of $3.09 million. Mr. Moore increased his stake by 39.78% to 281,105 shares with this purchase.
• Director  Robert D’Agostino acquired 12,500 shares, paying $40.59 per share for a total amount of $507,396. Mr. D’Agostino increased his stake by 8.86% to 153,573 shares with this purchase.
• Director Renee E. LaBran acquired 250 shares, paying $39.97 per share for a total amount of $9,993. Ms. LaBran increased her stake by 7.39% to 3,633 shares with this purchase.

You can view the list of recent insider transactions for B. Riley Financial, Inc. here.

2. Corteva, Inc. (CTVA): $64.47

Chief Executive Officer Charles V. Magro acquired 40,000 shares of this agriculture company, paying $60.64 per share for a total amount of $2.43 million. Mr. Magro increased his stake by 46.46% to 126,095 shares with this purchase.

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

3. Cimpress plc (CMPR): $36.9

CEO, Chairman Robert S. Keane acquired 41,866 shares of this printing products company, paying $37.89 per share for a total amount of $1.59 million. These shares were purchased indirectly by the Keane Family Foundation.

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

4. Centene Corporation (CNC): $72.74

Shares of this multi-national healthcare enterprise were acquired by 3 insiders:

• Director Theodore R. Samuels II acquired 7,000 shares, paying $71.88 per share for a total amount of $503,160. Mr. Samuels increased his stake by 142.48% to 11,913 shares with this purchase.
• EVP, CFO Andrew Lynn Asher acquired 6,800 shares, paying $71.93 per share for a total amount of $489,156. Mr. Asher increased his stake by 2.21% to 314,755 shares with this purchase.
• EVP, Chief Operating Officer James E. Murray acquired 6,750 shares, paying $73.30 per share for a total amount of $494,775. Mr. Murray increased his stake by 5.21% to 136,220 shares with this purchase.

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

5. NextEra Energy, Inc. (NEE): $74.74

Shares of this regulated electric company were acquired by 5 insiders:

• Director David L. Porges acquired 7,000 shares, paying $73.27 per share for a total amount of $512,862. Mr. Porges increased his stake by 19.70% to 42,524 shares with this purchase.
• Director John A. Stall acquired 4,000 shares, paying $74.89 per share for a total amount of $299,560. Mr. Stall increased his stake by 113.73% to 7,517 shares with this purchase.
• EVP, Finance and CFO Terrell Kirk Crews II acquired 2,672 shares, paying $74.87 per share for a total amount of $200,053. Mr. Crews increased his stake by 8.76% to 33,170 shares with this purchase.
• Director James Lawrence Camaren acquired 2,000 shares, paying $73.50 per share for a total amount of $146,991. Mr. Camaren increased his stake by 1.37% to 147,930 shares with this purchase.
• Director Amy B. Lane acquired 1,000 shares, paying $74.86 per share for a total amount of $74,864. Ms. Lane increased her stake by 2.48% to 41,277 shares with this purchase.

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

6. Align Technology, Inc. (ALGN): $315.81

Shares of this dental devices company were acquired by 2 insiders:

• President and CEO Joseph M. Hogan acquired 2,928 shares, paying $341.50 per share for a total amount of $999,912. Mr. Hogan increased his stake by 1.58% to 188,417 shares with this purchase.
• EVP & Chief Financial Officer John Morici acquired 587 shares, paying $341.84 per share for a total amount of $200,660. Mr. Morici increased his stake by 7.71% to 8,204 shares with this purchase.

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

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

Notable Insider Sales:

1. Stryker Corporation (SYK): $264.34

Shares of this medical technology company were sold by 5 insiders:

• Director Ronda E. Stryker sold 520,000 shares for $272.81, generating $141.86 million from the sale.
• VP, Chief Financial Officer Glenn S. Boehnlein sold 24,425 shares for $278.54, generating $6.8 million from the sale.
• VP, Chief Accounting Officer William E. Berry Jr. sold 4,058 shares for $279.79, generating $1.14 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• VP, Chief Legal Officer Robert S. Fletcher sold 3,000 shares for $283.54, generating $850,610 from the sale.
• Group President James Andrew Pierce sold 400 shares for $277.88, generating $111,152 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 Stryker Corporation here.

2. ZoomInfo Technologies Inc. (ZI): $25.8

Chief Executive Officer Henry Schuck sold 1,041,667 shares of ZoomInfo for $28.28, generating $29.46 million from the sale. 41,667 of these shares were sold indirectly through a trust.

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

3. The Charles Schwab Corporation (SCHW): $80.46

Shares of Charles Schwab were sold by 2 insiders:

• Co-Chairman Charles R. Schwab sold 443,090 shares for $80.33, generating $35.59 million from the sale.
• Director Paula A. Sneed sold 20,888 shares for $80.00, generating $1.67 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 The Charles Schwab Corporation here.

4. Regeneron Pharmaceuticals, Inc. (REGN): $757.61

Shares of this biotech company were sold by 6 insiders:

• President and Chief Scientific George Yancopoulos sold 13,189 shares for $800.08, generating $10.55 million from the sale. These shares were sold indirectly by a trust.
• Director Joseph L. Goldstein sold 3,613 shares for $800.00, generating $2.89 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Michael S. Brown sold 3,571 shares for $797.86, generating $2.85 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP Finance CFO Robert E. Landry sold 1,491 shares for $776.80, generating $1.16 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Bonnie L. Bassler sold 1,021 shares for $779.00, generating $795,359 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP Commercial Marion Mccourt sold 1,000 shares for $769.04, generating $769,040 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 Regeneron Pharmaceuticals, Inc. here.

5. Bristol-Myers Squibb Company (BMY): $72.2

Shares of this biopharmaceutical products company were sold by 2 insiders:

• Board Chair and CEO Giovanni Caforio sold 240,000 shares for $74.65, generating $17.92 million from the sale.
• EVP, Chief Human Resources Ann Powell sold 11,183 shares for $74.69, generating $835,258 from the sale.

You can view the list of recent insider transactions for Bristol-Myers Squibb Company here.

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 hold long positions in B. Riley (RILY) and Bristol-Myers Squibb Company (BMY). 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.