Welcome to edition 552 of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $5.43 million of stock compared to $37.41 million in the week prior. Selling increased with insiders selling $1.69 billion of stock last week compared to $1.25 billion 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 increased significantly to 310.71. In other words, insiders sold almost 311 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 33.53.
Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.
Notable Insider Buys:
1. Driven Brands Holdings Inc. (DRVN): $29.79
Shares of this automotive repair and maintenance services provider were acquired by 2 insiders:
If every time you happened to drive past a car wash business or an auto maintenance shop and had the burning desire to own a boring but dependable low-growth business, then your wishes may have come true with the IPO of Driven Brands Holdings earlier this month for $22 per share. While I jest about the burning desire part, Driven Brands has been consolidating a fragmented industry through acquisitions and now operates or franchises a little over 4,000 locations across the U.S. and 14 countries. Driven Brands picked up 900 locations through its 2020 acquisition of car wash company ICWG. The IPO was originally priced at a range of $17 to $20 per share before being bumped up to $22 per share but the number of shares offered were reduced.
In this new world that allows companies of all sizes to easily go public by merging with a Special Purpose Acquisition Vehicle (SPAC), it is interesting to see that Driven Brands chose the regular IPO route with Morgan Stanley, Bank of America and Goldman Sachs as lead underwriters and J.P. Morgan and Barclays playing second fiddle. We added 68 SPAC IPOs to our SPAC list just in the first three weeks of this year.
What is stranger is that insiders of the company are buying stock at prices well above the IPO price. Insiders often tend to sell shares in an IPO or after the six month lock-up expiration and we don’t see much buying in new IPOs. Maybe they are enthusiastic about the company’s growth and large addressable market. Beyond the 37% revenue CAGR from 2015 to 2019, same store sales also increased 5% in each of 2018 and 2019. The average same store sales growth over the last 12 years (excluding 2020) was 4%. The company does not include sales at its franchisees when calculating revenue but it is included in “system-wide sales”. The company figures it has a very large total addressable market (TAM) to tap into with just 1% market share in auto maintenance and car wash and 4% market share in the paint, collision and glass segment.
EBITDA for 2020 is expected to come in around $160 million compare to $93.65 in 2019. Adjusted EBITDA after including their ICWG car wash acquisition is expected to be $266.5 million at the mid-point of the range the company provided.
As one would expect from a company growing through acquisitions, there is a lot of debt with the company estimating $2.01 in net debt on the balance sheet by the end of 2020. The company expected to use most of the money raised from the IPO (between $700 and $800 million) to pay down debt and so net debt post-IPO is likely to range between $1.2 billion and $1.3 billion. This would put the EV/EBITDA around 20 assuming 132 million shares outstanding after the IPO and $1.2 billion in net debt. The other challenge for the company is the increased adoption of EVs, which generally require less maintenance and specialized components.
You can view the list of recent insider transactions for Driven Brands Holdings Inc. here.
P/E: N/A | Forward P/E: N/A | Industry P/E: N/A |
P/S: 6.15 | Price/Book: N/A | EV/EBITDA: N/A |
Market Cap: $4.91B | Avg. Daily Volume: 2,663,825 | 52 Week Range: $25.3 – $32.95 |
2. Adverum Biotechnologies, Inc. (ADVM): $13.39
Shares of this biotech company were acquired by 2 insiders:
You can view the list of recent insider transactions for Adverum Biotechnologies, Inc. here.
P/E: N/A | Forward P/E: -9.63 | Industry P/E: N/A |
P/S: N/A | Price/Book: 2.81 | EV/EBITDA: -9.02 |
Market Cap: $1.31B | Avg. Daily Volume: 1,021,341 | 52 Week Range: $7.36 – $26.98 |
3. Vector Group Ltd. (VGR): $12.16
EVP/COO Richard Lampen acquired 15,000 shares of this tobacco company, paying $12.10 per share for a total amount of $181,500. Mr. Lampen increased his stake by 3.50% to 443,986 shares with this purchase.
You can view the list of recent insider transactions for Vector Group Ltd. here.
P/E: 26.78 | Forward P/E: 14.31 | Industry P/E: 16.89 |
P/S: 1.3 | Price/Book: N/A | EV/EBITDA: 9.98 |
Market Cap: $1.86B | Avg. Daily Volume: 722,364 | 52 Week Range: $7.92 – $13.86 |
4. HEICO Corporation (HEI.A): $113.65
COB & CEO Laurans A. Mendelson acquired 1,054 shares of this aerospace, defense, and electronic related products company, paying $118.63 per share for a total amount of $125,036.
You can view the list of recent insider transactions for HEICO Corporation here.
P/E: 49.63 | Forward P/E: 40.59 | Industry P/E: 78.44 |
P/S: 0.58 | Price/Book: 1.59 | EV/EBITDA: 31.3 |
Market Cap: $331.79M | Avg. Daily Volume: 142,553 | 52 Week Range: $7.48 – $12.24 |
5. Landec Corporation (LNDC): $11.315
Chief Executive Officer Albert D. Bolles acquired 10,000 shares of this packaged foods company, paying $10.98 per share for a total amount of $109,800. Mr. Bolles increased his stake by 38.24% to 36,152 shares with this purchase.
You can view the list of recent insider transactions for Landec Corporation here.
P/E: N/A | Forward P/E: 59.55 | Industry P/E: 24.39 |
P/S: 0.58 | Price/Book: 1.59 | EV/EBITDA: 31.3 |
Market Cap: $331.79M | Avg. Daily Volume: 142,553 | 52 Week Range: $7.48 – $12.24 |
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Lemonade, Inc. (LMND): $153.49
Shares of this insurance company were sold by 5 insiders:
You can view the list of recent insider transactions for Lemonade, Inc. here.
P/E: N/A | Forward P/E: N/A | Industry P/E: 17.12 |
P/S: 89.18 | Price/Book: N/A | EV/EBITDA: -65.84 |
Market Cap: $8.69B | Avg. Daily Volume: 3,472,979 | 52 Week Range: $44.11 – $188.3 |
2. Guardant Health, Inc. (GH): $159.92
Chief Executive Officer Helmy Eltoukhy sold 639,114 shares of this precision oncology company for $161.36, generating $103.13 million from the sale. 148,245 of these shares were sold indirectly by Eltoukhy Investments, L.P.
You can view the list of recent insider transactions for Guardant Health, Inc. here.
P/E: N/A | Forward P/E: -98.72 | Industry P/E: 22.2 |
P/S: 58.93 | Price/Book: 14.63 | EV/EBITDA: -86.44 |
Market Cap: $15.99B | Avg. Daily Volume: 1,035,651 | 52 Week Range: $55.9 – $168.52 |
3. Facebook, Inc. (FB): $274.5
Shares of Facebook were sold by 2 insiders:
You can view the list of recent insider transactions for Facebook, Inc. here.
P/E: 31.27 | Forward P/E: 26.14 | Industry P/E: 41.78 |
P/S: 9.9 | Price/Book: 6.65 | EV/EBITDA: 24.4 |
Market Cap: $781.86B | Avg. Daily Volume: 19,182,056 | 52 Week Range: $137.1 – $304.67 |
4. Wayfair Inc. (W): $299.94
Shares of this e-commerce business were sold by 5 insiders:
You can view the list of recent insider transactions for Wayfair Inc. here.
P/E: N/A | Forward P/E: 122.42 | Industry P/E: 81.00 |
P/S: 2.37 | Price/Book: N/A | EV/EBITDA: 216.75 |
Market Cap: $30.88B | Avg. Daily Volume: 2,304,975 | 52 Week Range: $21.7 – $369 |
5. Chewy, Inc. (CHWY): $105.08
Shares of this pet food and treats company were sold by 2 insiders:
You can view the list of recent insider transactions for Chewy, Inc. here.
P/E: N/A | Forward P/E: -210.16 | Industry P/E: 81.00 |
P/S: 6.71 | Price/Book: N/A | EV/EBITDA: -295.44 |
Market Cap: $43.36B | Avg. Daily Volume: 4,278,632 | 52 Week Range: $20.62 – $115.274 |
You can view the full list of sales from this Insider Sales page.
Disclaimer: 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.