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Nasdaq’s CEO Makes Her First Purchase in Over a Decade – Insider Weekends

  • August 6, 2023

Nasdaq Inc. (NDAQ) is well known for not just being the operator of one of the largest stock exchanges in the world, but also for the sheer amount of data and analytics (along with other similar services) it offers to customers. The company was founded in 1971 as one of the first electronic stock exchanges, primarily dealing in OTC markets, but soon grew to become the official stock exchange it is today – with a focus primarily on the technology and biotech sectors. The Nasdaq business has three different business segments: Market Platforms, Capital Access Platforms, and Anti-Financial Crime, all of which were created in 2022 as part of a larger restructuring in the business and its products.

The Market Platforms business segment covers the Trading Services and Marketplace Technology products that Nasdaq offers, which essentially deal with the various exchanges that the Nasdaq corporation owns and manages. As of December 31, 2022, a total of 4,230 companies listed securities on The Nasdaq Stock Market. The Capital Access Platforms segment covers most of the data services that the Nasdaq corporation offers, whereas the Anti-Financial Crime segment operates various financial services that seek to preserve the integrity of the financial world.

What drew our attention to the company this week was the generally attractive profit margins that many stock exchange operators and financial data services like the Nasdaq enjoy. The business’s gross margin is a fairly strong 59.54%, and the company manages to squeeze out an 18.07% net margin from that number. Growth for the company has been moderating. For 2022 the company managed to grow revenue by 5.8% to $6.23 billion, which after transaction rebates and other transaction-based expenses, led to a total revenue of $3.58 billion for the year.

Graph of portions of revenue for each business segment
The Percentage of Revenues (excluding Transaction-Based Expenses) by Business Segment For Fiscal 2022

As for more recent quarterly results (Q2 2023), Nasdaq saw total revenue of $1.43 billion, which represented a decrease of 7.7% when compared to Q2 2022. However, after all transaction-based expenses were applied, revenue for the quarter sat at around $925 million, which was a 3.6% increase QoQ. However, operating expenses increased by 12.9%, leading to net income of $267 million, which represented a 13% decrease when compared to Q2 2022.

This week’s insider purchase came from Nasdaq’s Chair and CEO, Adena T. Friedman, who after being named CEO in January 2017, became the first woman to lead a global stock exchange. Ms. Friedman had originally joined the company in 1993, and later joined The Carlyle Group, serving as the CFO from 2011 to 2014.

Ms. Friendman then rejoined Nasdaq as President and COO, until she took on the role of CEO three years later. Ms. Friedman’s purchase comes at an interesting time for the company. In June 2023 Nasdaq the purchase of risk management. and regulatory software company Adenza from Thomas Bravo (a software investment firm) in a deal valued at $10.5 billion. This acquisition would add value by contributing heavily to Nasdaq’s Marketplace Technology and Anti-Financial Crime products/business segments.

The company has about $5 billion in net debt on the balance sheet. It trades at a forward EV/EBITDA of 14.23 and a forward P/E of 21.38. While the margins of any data and exchange company always seem attractive, the lack of any significant growth at Nasdaq makes the company far less exciting.  I am not a big fan of large acquisitions and would like to see how the integration goes and if any synergies are realized before I get interested in the stock.

Editor’s Note: Tamanna Suria contributed to this article.

Welcome to edition 693 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $100.46 million of stock compared to $24.68 million in the week prior. Selling increased to $1.39 billion compared to $900.49 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 the total insider purchases that week. The adjusted ratio for last week dropped to 13.89. In other words, insiders sold almost 14 times as much stock as they purchased. This week, the Sell/Buy ratio was unfavorable, compared to the prior week when the ratio stood at 36.48.

Notable Insider Buys:

1. Tidewater Inc. (TDW): $64.14

Director Robert Robotti acquired 117,698 shares of this offshore marine support and transportation services provider, paying $62.28 per share for a total amount of $7.33 million. These shares were purchased indirectly by Ravenswood Management Company, LLC.

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

P/E: 6414Forward P/E: 8.77Industry P/E: 8.45
P/S: 4.44Price/Book: 3.73EV/EBITDA: 23.99
Market Cap: $3.26BAvg. Daily Volume: 787,28852 Week Range: $18.37 – $65.79

2. Agree Realty Corporation (ADC): $64.61

Shares of this retail REIT were acquired by 3 insiders:

  • Director John Rakolta Jr. acquired 30,000 shares, paying $63.02 per share for a total amount of $1.89 million. Mr. Rakolta increased his stake by 10.00% to 330,056 shares with this purchase.
  • Executive Chairman of Board Richard Agree acquired 30,000 shares, paying $63.41 per share for a total amount of $1.9 million. These shares were purchased indirectly by the reporting person’s spouse and children.
  • President & CEO Joey Agree acquired 10,000 shares, paying $62.79 per share for a total amount of $627,900. Mr. Agree increased his stake by 1.89% to 539,253 shares with this purchase.

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

P/E: 36.1Forward P/E: 36.5Industry P/E: 26.35
P/S: 12.51Price/Book: 1.29EV/EBITDA: 20.09
Market Cap: $6.04BAvg. Daily Volume: 1,023,84152 Week Range: $62.67 – $80.44

3. Keurig Dr Pepper Inc. (KDP): $33.6

Chief R&D Officer Karin Rotem-Wildeman acquired 53,837 shares of this beverage company, paying $34.30 per share for a total amount of $1.85 million. Ms. Rotem-Wildeman increased her stake by 628.86% to 62,398 shares with this purchase.

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

P/E: 36.13Forward P/E: 17.5Industry P/E: 22.41
P/S: 3.24Price/Book: 1.86EV/EBITDA: 16.33
Market Cap: $47.17BAvg. Daily Volume: 9,674,65952 Week Range: $30.47 – $41.31

4. Crocs, Inc. (CROX): $105.91

Shares of Crocs were acquired by 2 insiders:

  • Director Thomas J. Smach acquired 11,435 shares, paying $105.68 per share for a total amount of $1.21 million. Mr. Smach increased his stake by 5.96% to 203,362 shares with this purchase. 10,000 of these shares were purchased indirectly by the reporting person’s child and 957 were purchased by his spouse.
  • Director Douglas J. Treff acquired 1,926 shares, paying $103.94 per share for a total amount of $200,188. Mr. Treff increased his stake by 2.01% to 97,656 shares with this purchase.

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

P/E: 10.75Forward P/E: 8.01Industry P/E: 17.42
P/S: 1.69Price/Book: 5.53EV/EBITDA: 8.24
Market Cap: $6.57BAvg. Daily Volume: 1,912,79552 Week Range: $65.17 – $151.32

5. Nasdaq, Inc. (NDAQ): $49.45

Chair and CEO Adena T. Friedman acquired 10,000 shares of Nasdaq, paying $51.00 per share for a total amount of $510,000. Ms. Friedman increased her stake by 0.60% to 1,672,318 shares with this purchase.

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

P/E: 22.17Forward P/E: 17.23Industry P/E: 10.08
P/S: 3.98Price/Book: 3.9EV/EBITDA: 14.73
Market Cap: $24.27BAvg. Daily Volume: 3,594,57752 Week Range: $48.65 – $69.22

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

Notable Insider Sales:

1. Vertiv Holdings Co (VRT): $35.71

Managing Director, E+I  Philip O’Doherty sold 1,916,824 shares of this electrical equipment & parts company for $33.17, generating $63.58 million from the sale.

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

P/E: 115.19Forward P/E: 19.3Industry P/E: 20.13
P/S: 2.12Price/Book: 8.19EV/EBITDA: 18.37
Market Cap: $13.56BAvg. Daily Volume: 5,894,24052 Week Range: $9.48 – $36.595

2. The St. Joe Company (JOE): $60.36

Director Bruce R. Berkowitz sold 676,200 shares of this real estate development operator for $63.03, generating $42.62 million from the sale.

You can view the list of recent insider transactions for The St. Joe Company here.

P/E: 52.03Forward P/E: 548.73Industry P/E: 26.35
P/S: 11Price/Book: 5.3EV/EBITDA: 39.23
Market Cap: $3.52BAvg. Daily Volume: 198,94052 Week Range: $31.11 – $65.99

3. Jefferies Financial Group Inc. (JEF): $35.5

Chairman of the Board Joseph S. Steinberg sold 1,148,060 shares of this investment banking and capital markets for $36.06, generating $41.39 million from the sale. These shares were sold indirectly by corporations that are owned directly or indirectly by or affiliated with the reporting person.

You can view the list of recent insider transactions for Jefferies Financial Group Inc. here.

P/E: 18.11Forward P/E: 9.54Industry P/E: 10.08
P/S: 1.53Price/Book: 0.85EV/EBITDA: 38.64
Market Cap: $7.84BAvg. Daily Volume: 1,116,65952 Week Range: $27.4952 – $40.68

4. PTC Inc. (PTC): $141.22

Director Blake D. Moret sold 160,000 shares of this software company for $145.29, generating $23.25 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: 52.89Forward P/E: 27.91Industry P/E: 26.20
P/S: 8.12Price/Book: 6.44EV/EBITDA: 32.2
Market Cap: $16.71BAvg. Daily Volume: 829,49152 Week Range: $101.82 – $152.09

5. Westinghouse Air Brake Technologies Corporation (WAB): $114.7

Shares of this technology-based locomotives company were sold by 5 insiders:

  • Director William E. Kassling sold 100,000 shares for $118.45, generating $11.85 million from the sale.
  • Director Albert J. Neupaver sold 59,327 shares for $118.78, generating $7.05 million from the sale. 15,400 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Exec VP, General Counsel, Sec. David L. Deninno sold 10,007 shares for $118.58, generating $1.19 million from the sale.
  • VP Fin., Corp. Controller, CAO John A. Mastalerz Jr. sold 7,353 shares for $118.21, generating $869,198 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director Linda S. Harty sold 2,247 shares for $118.65, generating $266,596 from the sale.

You can view the list of recent insider transactions for Westinghouse Air Brake Technologies Corporation here.

P/E: 31.95Forward P/E: 18.06Industry P/E: 20.13
P/S: 2.3Price/Book: 2.02EV/EBITDA: 15.87
Market Cap: $20.63BAvg. Daily Volume: 1,035,18552 Week Range: $79.33 – $119.7

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 a long position in Lions Gate Entertainment. 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.