Insider Weekends: Founder Of Entercom Communications Starts Buying Again

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Includes: ANET, ARNC, CARG, COLD, ETM, IR, KDP, KMI, MDCO, PFE, WMT
by: Asif Suria
Summary

Insider buying decreased significantly last week.

Notable Insider Buys: The Medicines Company, Kinder Morgan, Inc., Keurig Dr Pepper Inc., Entercom Communications Corp., and Arconic Inc.

Notable Insider Sales: Walmart Inc., Pfizer Inc., Arista Networks, Inc., Ingersoll-Rand Plc, and CarGurus, Inc.

Insider buying decreased significantly last week with insiders purchasing $158.33 million of stock compared to $314.42 million in the week prior. Selling on the other hand increased with insiders selling $3.8 billion of stock last week compared to $2.09 billion in the week prior. A large part of this increase in selling was on account of selling by insiders of Americold Realty Trust (NYSE:COLD) to the tune of $1.29 billion in a secondary offering.

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 went up to 24.02. In other words, insiders sold more than 24 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 6.65. Insider Sector Heat Map March 8, 2019 (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. The Medicines Company (NASDAQ:MDCO): $25.17

Director Alexander J. Denner acquired 855,000 shares of this pharmaceutical company, paying $25.39 per share for a total amount of $21.71 million. These shares were purchased indirectly by Sarissa Capital Management LP.

P/E: N/A Forward P/E: -11.24 Industry P/E: 32.48
P/S: 301.87 Price/Book: N/A EV/EBITDA: -13.74
Market Cap: $1.85B Avg. Daily Volume: 1,393,981 52 Week Range: $16.69-41.57

2. Kinder Morgan, Inc. (NYSE:KMI): $19.73

Executive Chairman Richard D. Kinder acquired 288,736 shares of this oil & gas pipelines company, paying $19.53 per share for a total amount of $5.64 million. Mr. Kinder increased his stake by 0.12% to 238,200,393 shares with this purchase.

This is the sixth week in a row Kinder Morgan made our list of notable insider purchases. We wrote the following about his purchases a month ago when the stock had appreciated to $18 per share.

We reported on $3.87 million of purchases by Mr. Kinder in the week prior and he more than tripled his buying last week. With the stock rebounding strongly off the Christmas Eve lows and trading close to a 52 week high, it is interesting to see Mr. Kinder continue to purchase shares.

Kinder Morgan was one of the first companies in the energy industry to favor the Master Limited Partnership (MLP) structure that allowed companies to pay no corporate taxes and pass all its profits to investors as distributions. More than four years ago, it was also one of the first to abandon the structure by merging its four pipeline companies into a single one and adopting a traditional C corporate structure. With changes in the tax structure in 2018 pushing the corporate tax rate well below the top individual tax rate, the MLP structure was no longer as tax efficient as it once was and we have seen a number of MLP companies converting to C corporations in 2018.

P/E: 29.67 Forward P/E: 18.1 Industry P/E: 566.58
P/S: 3.16 Price/Book: 1.33 EV/EBITDA: 12.84
Market Cap: $44.66B Avg. Daily Volume: 16,470,467 52 Week Range: $14.62-20.01

3. Keurig Dr Pepper Inc. (NYSE:KDP): $26.4

Shares of this beverage company were acquired by three insiders:

  • Director Peter Harf acquired 156,800 shares, paying $25.44 per share for a total amount of $3.99 million. These shares were purchased indirectly by HFS S.a.r.l
  • Director Olivier Goudet acquired 20,000 shares, paying $25.43 per share for a total amount of $508,696.
  • Senior VP & Controller Angela A. Stephens acquired 11,535 shares, paying $25.69 per share for a total amount of $296,383. Ms. Stephens increased his stake by 36.11% to 43,482 shares with this purchase.
P/E: 49.81 Forward P/E: 18.86 Industry P/E: 29.28
P/S: 4.99 Price/Book: 1.65 EV/EBITDA: 24.5
Market Cap: $37.12B Avg. Daily Volume: 2,886,598 52 Week Range: $20.46-124.36

4. Entercom Communications Corp. (NYSE:ETM): $5.8

Chairman Emeritus Joseph M. Field acquired 400,000 shares of this radio broadcasting company, paying $6.17 per share for a total amount of $2.47 million. These shares were purchased indirectly by Mr. Field's spouse and by a trust.

After buying Entercom stock several times last year, Mr. Field is increasing his stake again with a series of purchases in March even as the stock continues to weaken. We wrote the following about his purchases last summer:

Mr. Field's enthusiasm for Entercom has not dampened despite a large decline in the stock after first quarter 2018 results missed expectations on both the top line and the bottom line. This was the first quarter of operations after Entercom Communications merged with CBS Radio. For the month of May, Mr. Field picked up 943,062 shares for $7.6 million. You can check out a full write-up of Entercom by Vetle Forsland here or a quick summary on page 14 of Focused Compounding's letter here.

The big increase in revenue from CBS Radio has not translated to a large increase on the bottom line due to a drop in revenue on a per station basis and increased interest expense from a higher debt load. When post-merger restructuring in assets and goodwill write-downs are done, we will probably see how things start to shape up for Entercom in 2019 and if Mr. Field's enthusiasm for the stock is justified.

P/E: N/A Forward P/E: 4.92 Industry P/E: 14.84
P/S: 0.55 Price/Book: 0.61 EV/EBITDA: 8.82
Market Cap: $801.74M Avg. Daily Volume: 1,315,091 52 Week Range: $5.27-10.95

5. Arconic Inc. (NYSE:ARNC): $18.49

Chairman and CEO John C. Plant acquired 105,000 shares of this lightweight metals company, paying $18.51 per share for a total amount of $1.94 million. These shares were purchased indirectly through a trust.

P/E: 14.29 Forward P/E: 9.73 Industry P/E: 26.77
P/S: 0.64 Price/Book: 1.62 EV/EBITDA: 7.28
Market Cap: $8.97B Avg. Daily Volume: 6,114,350 52 Week Range: $15.63-25.24

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

Notable Insider Sales

1. Walmart Inc. (NYSE:WMT): $97.59

Director Robson S. Walton sold 664,328 shares of Walmart for $97.91, generating $65.04 million from the sale. These shares were sold indirectly through a trust.

P/E: 43.18 Forward P/E: 19.44 Industry P/E: 40.71
P/S: 0.55 Price/Book: 3.9 EV/EBITDA: 10.42
Market Cap: $283.52B Avg. Daily Volume: 8,460,929 52 Week Range: $81.78-106.21

2. Pfizer Inc. (NYSE:PFE): $40.89

Shares of Pfizer were sold by four insiders:

  • Executive Chairman Ian C. Read sold 580,866 shares for $43.18, generating $25.08 million from the sale.
  • President R&D Mikael Dolsten sold 149,553 shares for $43.55, generating $6.51 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Executive Vice President Sally Susman sold 72,723 shares for $43.15, generating $3.14 million from the sale.
  • Executive Vice President Dawn Rogers sold 15,002 shares for $42.98, generating $644,798 from the sale.
P/E: 21.91 Forward P/E: 13.28 Industry P/E: 32.48
P/S: 4.23 Price/Book: 3.69 EV/EBITDA: 11.36
Market Cap: $227.01B Avg. Daily Volume: 26,312,926 52 Week Range: $34.32-46.47

3. Arista Networks, Inc. (NYSE:ANET): $274.55

Shares of this cloud networking company were sold by four insiders:

  • Chief Customer Officer Anshul Sadana sold 42,084 shares for $286.27, generating $12.05 million from the sale. 40,571 of these shares were sold as a result of exercising options immediately prior to the sale.
  • President and CEO Jayshree Ullal sold 33,498 shares for $286.65, generating $9.6 million from the sale.
  • Senior Vice President, CFO Ita M. Brennan sold 5,000 shares for $286.35, generating $1.43 million from the sale.
  • SVP and General Counsel Marc Taxay sold 2,000 shares for $285.81, generating $571,615 from the sale. 1,085 of these shares were sold as a result of exercising options immediately prior to the sale.
P/E: 67.69 Forward P/E: 25.4 Industry P/E: 16.4
P/S: 9.66 Price/Book: 9.69 EV/EBITDA: 26.92
Market Cap: $20.79B Avg. Daily Volume: 868,436 52 Week Range: $187.08-313.367

4. Ingersoll-Rand Plc (NYSE:IR): $104.3

Shares of this diversified industrials company were sold by three insiders:

  • Chairman and CEO Michael W. Lamach sold 105,064 shares for $105.74, generating $11.11 million from the sale.
  • Sr VP and CFO Susan K. Carter sold 70,037 shares for $105.67, generating $7.4 million from the sale.
  • Senior Vice President Marcia J. Avedon sold 23,473 shares for $105.83, generating $2.48 million from the sale.
P/E: 19.52 Forward P/E: 14.96 Industry P/E: 24.94
P/S: 1.61 Price/Book: 3.59 EV/EBITDA: 12.26
Market Cap: $25.26B Avg. Daily Volume: 1,592,575 52 Week Range: $79.63-107.64

5. CarGurus, Inc. (NASDAQ:CARG): $39.24

Shares of this online auto shopping provider were sold by two insiders:

  • CEO and Chairman Langley Steinert sold 234,812 shares for $39.68, generating $9.32 million from the sale. 11,740 of these shares were sold indirectly through a trust.
  • Director Anastasios Parafestas sold 223,775 shares for $41.63, generating $9.32 million from the sale. These shares were sold indirectly through various trusts.
P/E: 68.84 Forward P/E: 71.35 Industry P/E: 34.02
P/S: 9.57 Price/Book: 22.32 EV/EBITDA: 148.47
Market Cap: $4.35B Avg. Daily Volume: 686,901 52 Week Range: $29.185-57.25

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

Disclosure: I am/we are long ETM. 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.

Additional disclosure: Disclaimer: I hold a long position in Entercom Communications. 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.