There were so many interesting situations that showed up on our list of top insider purchases and sales from last week that it was hard to pick just one to discuss briefly in this Insider Weekends article. There were at least three situations where multiple strategies came together including spinoffs with insider buying and an M&A transaction with insider buying.
Insider buying in a deal that is yet to close is very rare and only once in the 15 years that I have been tracking both M&A transactions and insider buying have I come across a similar situation. Before we discuss this highly unusual situation, I wanted to touch upon insider buying at two companies, one that completed a spinoff recently and another one that has a planned spinoff in the second half of this year.
Starz Entertainment Corp (STRZ): $18.05
Lions Gate Entertainment, the company behind movie and TV franchises like Hunger Games, John Wick, Saw and Mad Men, spun off its remaining stake in its movie and TV studios company Lionsgate Studios (LION) last month. Following this spinoff, it collapsed its two classes of shares into one and renamed itself Starz Entertainment (STRZ). This remaining Starz business is its cable TV and direct-to-consumer business that Lions Gate acquired for a rich price of $4.4 billion in 2016.
Most of us who have observed or owned the old Lions Gate Entertainment considered the Starz business a drag on the overall company. Post-spinoff we expected Lionsgate Studios to do well and for Starz to decline. Instead, the exact opposite happened. Lionsgate Studios is down nearly 21%, while Starz is up an astounding 61% since the spinoff.