×

Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

CEO of Align Technology Purchases Shares Amidst Buyback – Insider Weekends

  • November 12, 2023

Align Technology (ALGN): $192.13

Market Cap: $14.72B

Enterprise Value:$13.54B

Key Insights

  • Align Technology’s claim to fame and profits are Invisalign Clear Aligners – an alternative form of orthodontic treatment to traditional metal braces.
  • The company’s CEO and President, Joseph Hogan, has made two $1 million purchases in the last two weeks – following the stock’s sharp drop after Q3 2023 results were announced.
  • Align insiders have historically been spot on with their purchases, buying at the lows and selling at the peaks – and we decided to revisit the company to evaluate the potential for a rebound.
  • Mr. Hogan’s newest purchase comes at a time where the company is also repurchasing stock, with an accelerated buyback program of $250 million announced for Q4 2023, part of a larger $1 billion repurchase plan.
  • The company has attractive margins and valuation has dropped (making it less expensive than it was before). Revenue is still growing albeit growth rates have moderated.
  • Macro and industry conditions have made business difficult, and Align expects revenue to drop in Q4 2023 on a sequential quarter basis.

Making our way through the Daily Event Driven Monitor often yields interesting companies that may not make the list of our top five insider purchases or sales of the week. This week, it was the roughly $1 million purchase of Align Technology by President and CEO Joseph Hogan that drew our attention, especially considering he had made another $1 million purchase a week prior.

Align Technology is most known for its Invisalign Clear Aligners, an alternative orthodontic treatment to the traditional metal braces, but also has a host of other systems and products for the entire orthodontic process. Align has already brought its products to over 15.7 million patients, but the market for orthodontic treatment remains huge – with over 22 million orthodontic treatments starting every year.

List of all Align Technology Products through all stages of the treatment process
A list of all Align Technology products through all stages of the treatment process

We’ve always been drawn to Align, especially considering the fairly apt timing of transactions made by the company’s insiders. We first wrote the following about the company in an Insider Weekends article in May 2022:

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.

A few months later, in November 2022, we covered Mr. Hogan’s insider purchases again and wrote the following:

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.

We wrote about the company a third time earlier this year and mentioned:

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.

With a forward P/E value of 33.30 and forward EV/EBITDA of 14.28, valuation has started getting to levels we are finding attractive.

After Q3 2023 results were released, the stock quickly dropped by over 30%, following which Mr. Hogan made the first of his $1 million purchases. What’s interesting to note is that looking at a table of Mr. Hogan’s purchases, he always seems to buy stock when the price dips below $200 – the only exceptions being his May 2022 purchase at around $300 and his February 2023 purchase at a high of per share $341.50.

Align CEO Insider Purchases

It’s also worth noting that these recent insider purchases come at a time when Align is repurchasing stock – as part of a $1 billion stock repurchase program authorized in 2023. A new accelerated repurchase program of $250 million was announced for Q4 2023 and the company called out that CEO Joe Hogan intended to personally purchase $1 million of Align stock. I normally don’t like companies explicitly calling out insider purchases but there are always exceptions like we saw with Harold Hamm’s insider purchases of Continental Resources.

The large recent drop is primarily due to Q3 2023 EPS of $2.14 missing estimates by $0.12. As mentioned earlier, while Align’s gross margin and net margin remain at an attractive 70% and 9.5% respectively, concerns surrounding revenue and net income growth remain key for investors.

As noted in their Q3 2023 conference call, Align’s CEO and CFO highlighted difficult industry headwinds – new orthodontic patient appointments across North America were down 8.7% year over year and ortho case starts were down 6.9% year over year, the biggest decrease in over a year. Despite that, revenue for the quarter was $960.2 million – a 7.8% increase YoY and the company shipped products to 85,200 doctors in Q3 2023, the highest number in two years. While total case volume (Clear Aligner shipments) for the quarter was 602,300 – an increase of 2.3% YoY, the number was still down sequentially, reflecting weaker than expected demand for orthodontic treatment, especially for adult patients. Net income for the quarter was $121.4 million.

As for Q4 2023 guidance, the company expects worldwide revenue to be in the range of $920 to $940 million, which is down sequentially from Q3 23, reflecting a more challenging macro environment for doctors and patients with fewer orthodontic case starts. Align also noted possible supply issues given the current war in the Middle East, given that a large part of their systems and services business relies on scanners developed in Israel.

The main concern we have about Align is consumer’s ability to begin the more expensive treatment plans that Align offers, when compared to traditional metal braces. That being said, Align has expanded beyond North America and into the APAC region, which is definitely helping growth. They have also been creating services for doctors, including digital tools like Clincheck Live Update (used by 41,000 doctors on more than 560,000 cases during Q3 2023) and the Invisalign Practice App (actively used by 87,000 doctors). Given current guidance surrounding the company and industry as a whole, it is possible that the stock might remain under pressure for a few more weeks. Overall we think Align insiders have a pretty good track record with their transactions, and the accelerated buyback program also looks promising. We will look into starting a position in the company in the near future.


Welcome to edition 707 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $110.16 million of stock compared to $35.99 million in the week prior. Selling also increased to $860.26 million compared to $428.94 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 7.81. In other words, insiders sold almost 8 times as much stock as they purchased. This week, the Sell/Buy ratio was favorable, compared to the prior week when the ratio stood at 11.92.

Notable Insider Buys:

1. Energy Transfer LP (ET): $13.14

Shares of this energy-related services provider were acquired by 3 insiders:

  • Executive Chairman Kelcy L. Warren acquired 2,000,000 shares, paying $13.43 per share for a total amount of $26.86 million. Mr. Warren increased his stake by 3.10% to 66,578,477 shares with this purchase.
  • EVP Bradford D. Whitehurst acquired 10,000 shares, paying $13.10 per share for a total amount of $131,000. Mr. Whitehurst increased his stake by 0.76% to 1,323,055 shares with this purchase.
  • EVP & Pres. LNG Thomas P. Mason acquired 7,500 shares, paying $13.33 per share for a total amount of $99,973. Mr. Mason increased his stake by 0.44% to 1,707,720 shares with this purchase.

You can view the list of recent insider transactions for Energy Transfer LP – Unit here.

P/E: 12.28Forward P/E: N/AIndustry P/E: 9.59
P/S: 0.53Price/Book: 0.99EV/EBITDA: 8.3
Market Cap: $41.33BAvg. Daily Volume: 14,353,92152 Week Range: $10.34 – $13.82

2. Sarepta Therapeutics Inc (SRPT): $79.45

Shares of this commercial-stage biopharmaceutical company were acquired by 2 insiders:

  • Director Richard Barry acquired 50,000 shares, paying $78.81 per share for a total amount of $3.94 million. These shares were purchased indirectly by a trust.
  • President & CEO Douglas S. Ingram acquired 25,225 shares, paying $79.36 per share for a total amount of $2 million. Mr. Ingram increased his stake by 6.91% to 390,307 shares with this purchase.

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

P/E: -10.17Forward P/E: N/AIndustry P/E: 27.76
P/S: 6.73Price/Book: 9.7EV/EBITDA: -13.68
Market Cap: $7.43BAvg. Daily Volume: 2,658,53952 Week Range: $55.25 – $159.89

3. Remitly Global Inc (RELY): $21.3

Director Nigel W. Morris acquired 300,000 shares of this digital financial services provider for immigrants and their families, paying $19.36 per share for a total amount of $5.81 million. Mr. Morris increased his stake by 20.00% to 1,800,213 shares with this purchase.

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

P/E: -36.9Forward P/E: N/AIndustry P/E: 9.25
P/S: 4.53Price/Book: 7.34EV/EBITDA: -42.06
Market Cap: $3.94BAvg. Daily Volume: 2,322,05252 Week Range: $8.94 – $27.95

4. Keurig Dr Pepper Inc (KDP): $30.97

Chief Operating Officer Timothy P. Cofer acquired 100,000 shares of this beverage company, paying $31.17 per share for a total amount of $3.12 million. Mr. Cofer increased his stake by 33.29% to 400,393 shares with this purchase.

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

P/E: 22.61Forward P/E: N/AIndustry P/E: 19.62
P/S: 2.94Price/Book: 1.71EV/EBITDA: 15.93
Market Cap: $43.31BAvg. Daily Volume: 9,496,63352 Week Range: $27.66 – $37.49

5. Inari Medical Inc (NARI): $53.27

Director Donald B. Milder acquired 56,100 shares of this medical devices company, paying $53.44 per share for a total amount of $2.99 million. These shares were purchased indirectly by a trust.

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

P/E: -1084.93Forward P/E: N/AIndustry P/E: 27.76
P/S: 6.54Price/Book: 6.76EV/EBITDA: 251.16
Market Cap: $3.07BAvg. Daily Volume: 1,064,12252 Week Range: $47.81 – $83.84

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

Notable Insider Sales:

1. Meta Platforms Inc (META): $328.77

Shares of Meta Platforms were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 112,036 shares for $316.73, generating $35.48 million from the sale. These shares were sold indirectly by a trust.
  • Chief Legal Officer Jennifer Newstead sold 658 shares for $317.00, generating $208,586 from the sale.

You can view the list of recent insider transactions for Meta Platforms Inc – Class A here.

P/E: 29.07Forward P/E: N/AIndustry P/E: 16.50
P/S: 6.97Price/Book: 5.92EV/EBITDA: 18.74
Market Cap: $884.39BAvg. Daily Volume: 22,468,51652 Week Range: $108.32 – $330.54

2. Arch Capital Group Ltd (ACGL): $85.95

Shares of this insurance company were sold by 2 insiders:

  • CEO Marc Grandisson sold 350,000 shares for $85.44, generating $29.9 million from the sale. These shares were sold indirectly by the company.
  • CEO, Global Mortgage Group David Gansberg sold 7,350 shares for $89.49, generating $657,788 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 Arch Capital Group Ltd here.

P/E: 14.54Forward P/E: N/AIndustry P/E: 9.25
P/S: 2.52Price/Book: 2.1EV/EBITDA: 9.8
Market Cap: $32.06BAvg. Daily Volume: 2,247,87652 Week Range: $55.62 – $90.65

3. Alphabet Inc (GOOG): $134.06

Director Kavitark Ram Shriram sold 150,000 shares of Alphabet for $131.09, generating $19.66 million from the sale. 75,000 of these shares were sold indirectly by the reporting person’s spouse.

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

P/E: 27.93Forward P/E: N/AIndustry P/E: 16.50
P/S: 5.22Price/Book: 6.19EV/EBITDA: 16.58
Market Cap: $1552.13BAvg. Daily Volume: 23,713,55252 Week Range: $85.57 – $142.38

4. Donnelley Financial Solutions Inc (DFIN): $54.48

Director Jeffrey Jacobowitz sold 343,206 shares of this risk and compliance solutions company for $55.55, generating $19.07 million from the sale. These shares were sold indirectly by Simcoe Management Company, LLC.

You can view the list of recent insider transactions for Donnelley Financial Solutions Inc here.

P/E: 20.25Forward P/E: N/AIndustry P/E: 9.25
P/S: 2.01Price/Book: 4.15EV/EBITDA: 9.21
Market Cap: $1.59BAvg. Daily Volume: 187,34852 Week Range: $35.69 – $57.08

5. Salesforce Inc (CRM): $213.63

Shares of this cloud software company were sold by 4 insiders:

  • Chair and CEO Marc Benioff sold 75,000 shares for $209.68, generating $15.73 million from the sale.
  • Pres/Chief Engineering Officer Srinivas Tallapragada sold 10,000 shares for $207.23, generating $2.07 million 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 2,627 shares for $210.00, generating $551,670 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 1,850 shares for $209.74, generating $388,019 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: 134.36Forward P/E: N/AIndustry P/E: 24.17
P/S: 6.29Price/Book: 3.58EV/EBITDA: 33.2
Market Cap: $207.86BAvg. Daily Volume: 4,130,86552 Week Range: $126.34 – $238.22

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 Meta (META). 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.