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CEO of a Sum-Of-The-Parts Company Makes a Purchase – Insider Weekends

  • October 1, 2023

Key Insights:

  • The CEO of Cannae Holdings (CNNE) recently purchased over $900,000 worth of shares
  • Cannae Holdings is a familiar company – we first introduced the company in an April 2022 mid-month update, but chose to exit the position in July 2023
  • Cannae Holdings is a sum-of-the-parts company, much like IAC – the opportunity lies in the various components of Cannae’s portfolio. According to the company, Cannae is currently trading at a 46% discount to its intrinsic value
  • While Cannae seems attractive due to the discount to NAV, some companies in Cannae’s portfolio are currently facing trouble, and there is no catalyst to propel Cannae to the intrinsic value that it should be trading at

The insider purchase we chose to highlight this week came from a familiar name, Richard N. Massey, CEO of Cannae Holdings (CNNE). Cannae Holdings was the company we featured back in our April 2022 mid-month update, and was an interesting sum-of-the-parts (SOTP) opportunity – much like IAC Interactive (IAC) with its numerous spinoffs including the dating websites operator Match Group (MTCH) or the video streaming company Vimeo (VMEO). Cannae Holdings was brought to our attention in April 2022 by a series of insider purchases at the company, and we wrote the following in our April 2022 mid-month update:

Cannae is an interesting holding company with a leadership team led by Bill Foley who successfully grew 3 major public companies including Fidelity National Financial (FNF), Fidelity National Information Services (FIS) and Black Knight (BKI). Bill Foley acquired Fidelity National Financial for $3 million in 1984, acquired Chicago Title Insurance Company in 2000 and made FNF the largest title insurance company in the United States. We wrote about FNF in the February 2021 Special Situations Newsletter and it is currently a position in our model portfolio. This article does an excellent job of articulating how Bill Foley built several multi-billion dollar businesses and generated one of the best long-term investing track records.

Analyzing SOTP opportunities can be time consuming as you have to determine the various components, what they might be worth in public or private markets and ascertain the likelihood of unlocking value through spin-offs or sales. Even if management were to sell a division, are they likely to be good stewards of that capital or send the proceeds to shareholders as a special dividend. Cannae Holdings (CNNE) not only outlined what the sum-of-the-parts of its holdings works out to in an February 2022 investor presentation but also provided an update as of March 31, 2022 that shows that the company was trading at an astounding 42% discount to its net asset value (NAV).

Cannae's SOTP Breakdown from March 2022
Cannae’s SOTP Breakdown from March 2022

Since the start of April, the top 5 positions taken together have seen their gross fair value go up by almost 1%, mostly driven by a 35% gain in System1 (SST) and partially offset by a 12% loss in Ceridian HCM Holding (CDAY). During the same period, Cannae has seen its stock decline an additional 4%. It is not surprising to see that insiders have been buyers of the stock as the discount to NAV widened even more in April.

Why is the market valuing Cannae at such a big discount? Some of the reasons include,

  • Both technology companies like Ceridian and companies that went public by merging with a SPAC like System1 have been big decliners in recent months and that trend could continue.
  • Bill Foley and his team charge a 1.5% management fee to Cannae. For realized gains above an 8% hurdle, the fee on gains is 15% if the realized gains are below 2 times cost. As mentioned in the article we referenced above, for gains of >2x cost, the fee on gains goes to 20%.
  • Investors are not too keen on SOTP type of investments without any near-term catalysts. Our portfolio holding company SuRo Capital (SSSS) is also trading at a significant discount to NAV.

We chose to exit our position in Cannae earlier this year after a roughly 13% drop in the stock price, and from then, the price has continued to decline to where it sits right now – $18.64 per share. If we look at Cannae’s SOTP breakdown for September 2023, we can see that the intrinsic value of the company per share has also dropped from the $40.98 intrinsic value per share figure given in March 2022.

Cannae SOTP Breakdown for September 2023
Cannae SOTP Breakdown for September 2023

Part of this change in intrinsic value can be attributed to the shifting of positions in Cannae’s portfolio — most notably a decrease in ownership stake in companies like Amerilife or Dun & Bradstreet, but a large part of it is that the various companies in Cannae’s portfolio have faced difficult headwinds in their respective industries. The current high inflation is significantly impacting the restaurant industry, which increases the costs of the restaurant groups in Cannae’s portfolio and furthermore, the average weekly sales at the restaurants are typically higher in the first and fourth quarters, meaning revenue during Q2 and Q3 often dips.

As for Q2 2023 results, quite a few of the companies in Cannae’s portfolio saw increases in revenue, such as Dun & Bradstreet, Alight, Ceridian, and Paysafe. However, Dun & Bradstreet, Alight, and Paysafe still reported a net loss for the quarter, and Dun & Bradstreet and Alight actually saw deeper losses when compared to Q2 2022.

System1 has been going through challenges regarding declining cash flows and financial performance, and has actually disclosed on its Q1 2023 filing that there was a doubt as to whether it could continue as a going concern. Net revenue did increase ever so slightly when compared to Q2 2022 and the net loss was also slightly less. On August 1, 2023, a representative from Cannae on System1’s board resigned – and in early September, Cannae began to reduce its stake in System1, which could be the beginning of Cannae’s distancing from the struggling company.

In terms of more general results for Cannae during Q2 2023, total revenue declined to $152.8 million from $174.5 in Q2 2022, and this was mostly due to restaurant revenue declining to $145.2 million from $166.7 million. While total operating expenses for the quarter did actually decrease, Cannae still ended up with a net loss of $87.2 million – which was actually better than the net loss of $263.3 in Q2 2022.

Cannae also authorized a 10 million share buyback program back in August 2022, and from May to July 2023, the company repurchased 3.1 million shares, returning roughly $62 million to shareholders. The main issue we see with Cannae is that despite it being valued at such a discount, there seems to be no catalyst for the stock price to reach that expected value – unless Cannae continues to spinoff companies like other SOTP companies (IAC, Yahoo, and Sears) have done. Furthermore, Cannae is experiencing many headwinds in the industries that it operates in, and given its 24% stake in System1, the potential for bankruptcy at System1 is definitely concerning for Cannae’s portfolio. We chose to write about the company to check back in after selling off our position back in July, but for the time being, we don’t see ourselves reinvesting.


Welcome to edition 701 of Insider Weekends. Insider buying decreased last week with insiders purchasing $50.48 million of stock compared to $93.28 million in the week prior. Selling increased to $828.01 million compared to $548.83 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 went up to 16.4. In other words, insiders sold more than 16 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 5.88.

Notable Insider Buys:

1. Asana, Inc. (ASAN): $18.31

President, CEO, & Chair Dustin A. Moskovitz acquired 1,679,219 shares of this work management platform, paying $17.35 per share for a total amount of $29.13 million. Mr. Moskovitz increased his stake by 3.82% to 45,611,868 shares with this purchase.

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

P/E: -11.89Forward P/E: -67.81Industry P/E: 25.10
P/S: 6.63Price/Book: 12.03EV/EBITDA: -11.13
Market Cap: $4.02BAvg. Daily Volume: 2,454,46052 Week Range: $11.32 – $27.14

2. Agree Realty Corporation (ADC): $55.24

Shares of this retail REIT were acquired by 3 insiders:

  • Director John Rakolta Jr. acquired 50,000 shares, paying $56.78 per share for a total amount of $2.84 million. Mr. Rakolta increased his stake by 15.15% to 380,056 shares with this purchase.
  • President & CEO Joey Agree acquired 10,000 shares, paying $56.10 per share for a total amount of $561,000. Mr. Agree increased his stake by 1.85% to 549,253 shares with this purchase.
  • Chief Growth Officer Craig Erlich acquired 1,800 shares, paying $55.25 per share for a total amount of $99,447. Mr. Erlich increased his stake by 4.96% to 38,060 shares with this purchase.

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

P/E: 31.39Forward P/E: 32.12Industry P/E: 23.37
P/S: 11.05Price/Book: 1.11EV/EBITDA: 17.97
Market Cap: $5.34BAvg. Daily Volume: 830,06552 Week Range: $55.01 – $75.71

3. Farmland Partners Inc. (FPI): $10.26

Executive Chairman Paul A. Pittman acquired 100,000 shares of this farmland REIT, paying $10.26 per share for a total amount of $1.03 million. Mr. Pittman increased his stake by 8.34% to 1,298,505 shares with this purchase.

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

P/E: 39.46Forward P/E: -171Industry P/E: 23.37
P/S: 8.67Price/Book: 0.96EV/EBITDA: 32.98
Market Cap: $513.74MAvg. Daily Volume: 321,66552 Week Range: $9.44 – $14.37

4. Plains GP Holdings, L.P. (PAGP): $16.12

Chairman & CEO Willie Chiang acquired 62,000 shares of this midstream energy infrastructure company, paying $16.24 per share for a total amount of $1 million. Mr. Chiang increased his stake by 24.15% to 318,704 shares with this purchase.

You can view the list of recent insider transactions for Plains GP Holdings, L.P. here.

P/E: 13.55Forward P/E: 12.69Industry P/E: 8.96
P/S: 0.08Price/Book: 2.01EV/EBITDA: 9.14
Market Cap: $3.89BAvg. Daily Volume: 2,465,42352 Week Range: $11.19 – $16.7

5. Cannae Holdings, Inc. (CNNE): $18.64

Chief Executive Officer Richard N. Massey acquired 50,000 shares of this diversified holding company, paying $18.66 per share for a total amount of $933,200. Mr. Massey increased his stake by 13.25% to 427,417 shares with this purchase.

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

P/E: N/AForward P/E: -45.46Industry P/E: 9.37
P/S: 2.18Price/Book: 0.53EV/EBITDA: -23.75
Market Cap: $1.37BAvg. Daily Volume: 412,65252 Week Range: $17.35 – $25.74

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

Notable Insider Sales:

1. Salesforce, Inc. (CRM): $202.78

Shares of this cloud software company were sold by 6 insiders:

  • Chair and CEO Marc Benioff sold 75,000 shares for $204.36, generating $15.33 million from the sale.
  • President/Chief Engineering Officer Srinivas Tallapragada sold 10,942 shares for $205.08, generating $2.24 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • President and COO Brian Millham sold 5,087 shares for $206.77, generating $1.05 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-Founder and CTO Parker Harris sold 2,192 shares for $205.36, generating $450,152 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • President and CFO Amy E. Weaver sold 942 shares for $205.22, generating $193,314 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • EVP & Chief Accounting Officer Sundeep G. Reddy sold 56 shares for $205.22, generating $11,492 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 Salesforce, Inc. here.

P/E: 126.74Forward P/E: 21.6Industry P/E: 25.10
P/S: 5.97Price/Book: 3.4EV/EBITDA: 25.81
Market Cap: $197.3BAvg. Daily Volume: 4,986,89352 Week Range: $126.34 – $238.22

2. Williams-Sonoma, Inc. (WSM): $155.4

President & CEO Laura Alber sold 100,000 shares of this home furnishing retailer for $150.00, generating $15 million from the sale.

You can view the list of recent insider transactions for Williams-Sonoma, Inc. here.

P/E: 10.78Forward P/E: 10.69Industry P/E: 15.07
P/S: 1.21Price/Book: 6.15EV/EBITDA: 7.07
Market Cap: $9.97BAvg. Daily Volume: 1,155,39652 Week Range: $109.22 – $158.75

3. Coterra Energy Inc. (CTRA): $27.05

Director Dan O. Dinges sold 550,000 shares of this independent oil and gas company for $26.68, generating $14.67 million from the sale.

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

P/E: 6.81Forward P/E: 9.84Industry P/E: 8.96
P/S: 2.66Price/Book: 1.61EV/EBITDA: 3.85
Market Cap: $20.42BAvg. Daily Volume: 5,728,21952 Week Range: $22.25 – $31.76

4. Intercontinental Exchange, Inc. (ICE): $110.02

Chief Executive Officer Jeffrey C. Sprecher sold 118,683 shares of this financial data & stock exchanges company for $112.81, generating $13.39 million from the sale. 70,442 of 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 Intercontinental Exchange, Inc. here.

P/E: 36.8Forward P/E: 18.1Industry P/E: 9.37
P/S: 8.54Price/Book: 2.59EV/EBITDA: 16.86
Market Cap: $62.84BAvg. Daily Volume: 2,418,07652 Week Range: $88.6 – $118.79

5. Atlassian Corporation (TEAM): $201.51

Shares of this software application company were sold by 3 insiders:

  • Co-CEO, Co-Founder Michael Cannon-Brookes sold 41,205 shares for $195.56, generating $8.06 million from the sale. These shares were sold indirectly by a trust.
  • Chief Revenue Officer Cameron Deatsch sold 3,411 shares for $196.92, generating $671,705 from the sale.

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

P/E: -106.06Forward P/E: 69.97Industry P/E: 25.10
P/S: 14.67Price/Book: 79.27EV/EBITDA: -258.18
Market Cap: $51.86BAvg. Daily Volume: 1,430,64152 Week Range: $113.855 – $246.15

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 Atlassian (TEAM). 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.