Insider Weekends: Revlon's Chairman Mr. Perelman Increases His Stake To Over 85%

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Includes: AFG, KMI, LGF.B, ODT, PAGP, PRIM, REV, TRXC, TWTR, WMT
by: Asif Suria

Summary

Insider buying increased last week.

Notable Insider Buys: KMI, REV, LGF.B, ODT, PAGP.

Notable Insider Sales: WMT, TRXC, AFG, TWTR, PRIM.

Insider buying increased last week with insiders purchasing $47.04 million of stock compared to $40.96 million in the week prior. Selling, on the other hand, declined sharply with insiders selling $989.57 million of stock last week compared to $1.63 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 dropped to 21.04. In other words, insiders sold more than 21 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week when the ratio stood at 39.79.

Insider Sector Heat Map September 28, 2018 (Source: InsideArbitrage.com database)

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. Kinder Morgan, Inc. (NYSE:KMI): $17.73

Executive Chairman Richard D. Kinder acquired 500,000 shares of this oil & gas pipelines company, paying $17.55 per share for a total amount of $8.78 million. Mr. Kinder increased his stake by 0.21% to 235,212,353 shares with this purchase.

After a cluster of purchases in late 2013, early 2014 and 2015 at much higher prices, we haven't seen much in terms of insider purchases by Mr. Kinder since his $9.29 million purchase in March 2017. A lot of insiders probably did not expect the downturn in oil and gas to last as long as it did. With oil at multi-year highs, there appears to be renewed enthusiasm for both oil majors as well as oil services companies.

Kinder Morgan has been slowing paying down its debt over the last three years but its net debt of over $37 billion gives me pause every time I look at the company.

P/E: N/A Forward P/E: 17.55 Industry P/E: 56.06
P/S: 2.84 Price/Book: 1.18 EV/EBITDA: 13.49
Market Cap: $39.13B Avg. Daily Volume: 11,092,542 52-Week Range: $14.69-19.83

2. Revlon, Inc. (NYSE:REV): $22.3

Director Ronald O. Perelman acquired 135,000 shares of this beauty care products company, paying $21.09 per share for a total amount of $2.85 million. These shares were purchased indirectly by MacAndrews & Forbes Incorporated.

After a string of insider purchases last year, Mr. Perelman took a break and resumed buying again last month. Following his latest group of purchases, his stake has now expanded to over 85% of the company. We wrote the following about Revlon after a $10.85 million purchase by Mr. Perelman in September 2017,

Revlon’s second largest shareholder, Mittleman Brothers, was probably worried about Mr. Perelman taking the company private and wrote this letter to the CEO and the board urging them to obtain a standstill agreement from Mr. Perelman so that he does not increase his stake to 90% and then attempt to take the company private via a short-form merger.

Mr. Perelman responded on September 15th and according to this letter indicated,

MacAndrews & Forbes presently does not intend to increase its beneficial ownership above 89% of the issued and outstanding Revlon Class A Common Stock (“Common Stock”) or to undertake transactions to take Revlon private.

Should MacAndrews & Forbes determine to undertake transactions to increase its beneficial ownership above 89% of the issued and outstanding Common Stock or to take Revlon private, MacAndrews & Forbes agrees to:

(1) notify the Board at least 5 business days in advance of such transactions; and, prior to consummating such transactions,

(2) convene a Board meeting;

(3) support the creation of a special committee of independent directors empowered to select its own advisors; and

(4) negotiate with that special committee regarding the terms of such transactions by MacAndrews & Forbes, in order to promote the interests of all shareholders, including minority shareholders.

The agreement in this paragraph shall terminate on the first anniversary of the date hereof, unless extended in writing by MacAndrews & Forbes prior to such date.

For the avoidance of doubt, this letter should not be construed as an admission by MacAndrews & Forbes that any of the assertions made in the Mittleman Letter have any merit whatsoever.

P/E: N/A Forward P/E: -18.13 Industry P/E: 80.67
P/S: 0.45 Price/Book: N/A EV/EBITDA: 39.05
Market Cap: $1.19B Avg. Daily Volume: 146,288 52-Week Range: $14-26.8

3. Lions Gate Entertainment Corp. (LGF-B): $23.30

Vice Chairman Michael Raymond Burns acquired 50,000 shares of this motion picture production and distribution company, paying $20.43 per share for a total amount of $1.02 million. Mr. Burns increased his stake by 4.82% to 1,086,868 shares with this purchase.

P/E: 17.48 Forward P/E: N/A Industry P/E: 39.56
P/S: 1.26 Price/Book: 1.56 EV/EBITDA: 14.73
Market Cap: $5.123B Avg. Daily Volume: 398,323 52-Week Range: $19.97-34.41

4. Odonate Therapeutics, Inc. (NASDAQ:ODT): $19.41

Chief Executive Officer Kevin C. Tang acquired 40,000 shares of this biotech company, paying $19.75 per share for a total amount of $789,973. These shares were purchased indirectly by Tang Capital Partners, LP.

P/E: N/A Forward P/E: -6.08 Industry P/E: 30.82
P/S: N/A Price/Book: 3.03 EV/EBITDA: -5.26
Market Cap: $521.97M Avg. Daily Volume: 46,222 52-Week Range: $15.15-32

5. Plains GP Holdings, LP (NYSE:PAGP): $24.53

Director John T. Raymond acquired 25,000 shares of this oil & gas midstream company, paying $23.40 per share for a total amount of $584,998. Mr. Raymond increased his stake by 11.34% to 245,531 shares with this purchase.

P/E: N/A Forward P/E: 16.25 Industry P/E: 56.06
P/S: 0.23 Price/Book: 2.33 EV/EBITDA: 19.31
Market Cap: $6.87B Avg. Daily Volume: 1,609,176 52-Week Range: $18.98-27

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

Notable Insider Sales:

1. Walmart Inc. (NYSE:WMT): $93.91

Shares of Walmart were sold by 2 insiders:

  • Director Robson S. Walton sold 2,009,792 shares for $94.63, generating $190.18 million from the sale. These shares were sold indirectly by a trust.
  • Executive Vice President John R. Furner sold 9,623 shares for $94.04, generating $904,964 from the sale.
P/E: 53.72 Forward P/E: 19.56 Industry P/E: 67.77
P/S: 0.54 Price/Book: 3.87 EV/EBITDA: 9.74
Market Cap: $275.04B Avg. Daily Volume: 7,150,253 52-Week Range: $77.5-109.98

2. TransEnterix, Inc. (NYSEMKT:TRXC): $5.8

Shares of this medical device company were sold by 2 insiders:

  • Director William N. Starling Jr. sold 3,614,649 shares for $6.28, generating $22.72 million from the sale. These shares were sold indirectly by Synergy Life Science Partners, L.P.
  • EVP and CFO Joseph P. Slattery sold 4,924 shares for $7.03, generating $34,616 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
P/E: N/A Forward P/E: -23.2 Industry P/E: 38.94
P/S: 82.47 Price/Book: 7.27 EV/EBITDA: -25.08
Market Cap: $1.22B Avg. Daily Volume: 6,291,282 52-Week Range: $1.27-6.98

3. American Financial Group, Inc. (NYSE:AFG): $110.97

Co-CEO & Co-President Carl H. Lindner III sold 181,000 shares of this insurance company for $113.49, generating $20.54 million from the sale. These shares were sold indirectly by a trust.

P/E: 18.85 Forward P/E: 13.00 Industry P/E: 16.08
P/S: 1.43 Price/Book: 1.94 EV/EBITDA: 9.29
Market Cap: $9.89B Avg. Daily Volume: 280,653 52-Week Range: $101.02-121.69

4. Twitter, Inc. (NYSE:TWTR): $28.46

Director Evan Clark Williams sold 682,242 shares of Twitter for $28.84, generating $19.67 million from the sale. These shares were sold indirectly by various trusts.

P/E: 92.1 Forward P/E: 36.03 Industry P/E: 72.87
P/S: 7.97 Price/Book: 3.85 EV/EBITDA: 32.27
Market Cap: $21.49B Avg. Daily Volume: 26,940,487 52-Week Range: $16.78-47.79

5. Primoris Services Corporation (NASDAQ:PRIM): $24.82

Shares of this engineering & construction company were sold by 2 insiders:

  • Director Brian Pratt sold 725,003 shares for $25.14, generating $18.22 million from the sale.
  • Chief Executive Officer David Lee King sold 7,866 shares for $25.44, generating $200,111 from the sale.
P/E: 23.00 Forward P/E: 11.82 Industry P/E: 21.46
P/S: 0.55 Price/Book: 2.26 EV/EBITDA: 10.13
Market Cap: $1.28B Avg. Daily Volume: 235,279 52-Week Range: $23.61-29.82

You can view the full list of sales from this Insider Sales page.

Disclaimer: I hold a long position in Twitter. 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.

Disclosure: I am/we are long TWTR.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.