Insider buying increased last week with insiders purchasing $57.84 million of stock compared to $43.89 million in the week prior. Selling more than doubled with insiders selling $1.17 billion of stock last week compared to $563.35 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 total insider purchases that week. The adjusted ratio for last week went up to 20.3. In other words, insiders sold more than 20 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 12.84. Insider Sector Heat Map May 3, 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. Biogen Inc. (NASDAQ:BIIB): $231.18
Shares of this biotech company were acquired by 2 insiders:
- Director Alexander J. Denner acquired 118,342 shares, paying $229.94 per share for a total amount of $27.21 million. These shares were purchased indirectly by Sarissa Capital Management LP.
- Chief Executive Officer Michel Vounatsos acquired 4,351 shares, paying $231.48 per share for a total amount of $1.01 million. Mr. Vounatsos increased his stake by 26.12% to 21,007 shares with this purchase.
This is the second time, Dr. Denner purchased shares of Biogen this year and this time the CEO joined him in his purchases. His earlier purchase in February was at an average price of $327.59. The stock declined sharply in March after the company terminated development of its Alzheimer's drug Aducanumab. We wrote the following about the company in February:
While Biogen is up significantly off its spring 2018 lows, which saw the stock dip below $250, the stock is still trading for less than 10 times EBITDA. Revenue continues to grow but the growth is anemic on account of competitive pressure for its multiple sclerosis drugs. Margins and free cash flow are healthy and that probably explains why both the company and Dr. Denner are buying stock.
Dr. Denner started Sarissa Capital Management in 2012 after working as a healthcare portfolio manager at Icahn Capital. As of its Q3 2018 13-F filing, the fund had a concentrated portfolio worth $453.36 million, with more than 36% of its assets in Biogen. The fund also held positions in Innoviva (NASDAQ:INVA) and Allergan (NYSE:AGN). Dr. Denner also serves as the Chairman of the Board at The Medicines Company (NASDAQ:MDCO).
|P/E: 9.99||Forward P/E: 7.53||Industry P/E: 59.11|
|P/S: 3.25||Price/Book: 3.24||EV/EBITDA: 6.67|
|Market Cap: $44.82B||Avg. Daily Volume: 2,399,664||52 Week Range: $216.12 - $388.67|
2. Kinder Morgan, Inc. (NYSE:KMI): $19.53
Executive Chairman Richard D. Kinder acquired 600,000 shares of this oil & gas pipelines company, paying $19.65 per share for a total amount of $11.79 million. Mr. Kinder increased his stake by 0.25% to 240,201,954 shares with this purchase.
|P/E: 28.22||Forward P/E: 17.75||Industry P/E: 23.21|
|P/S: 3.12||Price/Book: 1.31||EV/EBITDA: 12.89|
|Market Cap: $44.21B||Avg. Daily Volume: 14,614,703||52 Week Range: $14.62 - $20.44|
3. UnitedHealth Group Incorporated (NYSE:UNH): $231.95
Director Frederick William McNabb acquired 6,430 shares of this health insurance provider, paying $233.21 per share for a total amount of $1.49 million. Mr. McNabb increased his stake by 443.75% to 7,879 shares with this purchase.
|P/E: 18.01||Forward P/E: 13.94||Industry P/E: 17.81|
|P/S: 0.95||Price/Book: 4.15||EV/EBITDA: 12.54|
|Market Cap: $220.87B||Avg. Daily Volume: 5,797,579||52 Week Range: $208.07 - $287.94|
4. Archer-Daniels-Midland Company (NYSE:ADM): $43.67
Shares of this farm products company were acquired by 2 insiders:
- President & CEO Juan R. Luciano acquired 23,657 shares, paying $42.30 per share for a total amount of $1 million. Mr. Luciano increased his stake by 4.34% to 569,152 shares with this purchase.
- Chief Financial Officer Ray G. Young acquired 6,000 shares, paying $42.76 per share for a total amount of $256,542. Mr. Young increased his stake by 1.75% to 349,743 shares with this purchase.
|P/E: 15.06||Forward P/E: 11.71||Industry P/E: 20.31|
|P/S: 0.38||Price/Book: 1.29||EV/EBITDA: 12.1|
|Market Cap: $24.46B||Avg. Daily Volume: 3,767,295||52 Week Range: $39.16 - $52.07|
5. Cerner Corporation (NASDAQ:CERN): $68.47
Shares of this health information services company were acquired by 2 insiders:
- Director John J. Greisch acquired 9,000 shares, paying $67.57 per share for a total amount of $608,130. These shares were purchased indirectly through a trust.
- Director Halsey R. Wise acquired 7,600 shares, paying $65.76 per share for a total amount of $499,776.
Cerner is one of the largest public pure play healthcare information services companies that is nearly 10 to 20 times the size of other players in the Electronic Health Records (EHR) space like Allscripts (NASDAQ:MDRX) and NextGen (NASDAQ:NXGN). This is not because Cerner has 10 to 20 times the revenue of companies like Allscripts and NextGen but because the company is very well run and sports double-digit operating and net margins. At 4 times sales, the company trades inline with other mature software companies and is not being afforded the heady valuation high growth software companies are being given by the market.
|P/E: 35.68||Forward P/E: 21.6||Industry P/E: 72.76|
|P/S: 4.08||Price/Book: 4.34||EV/EBITDA: 18|
|Market Cap: $22.28B||Avg. Daily Volume: 2,618,172||52 Week Range: $48.78 - $69.34|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Microsoft Corporation (NASDAQ:MSFT): $128.9
President Bradford L. Smith sold 192,300 shares of Microsoft for $130.34, generating $25.06 million from the sale.
|P/E: 28.64||Forward P/E: 25.23||Industry P/E: 35.42|
|P/S: 8.08||Price/Book: 10.42||EV/EBITDA: 17.78|
|Market Cap: $987.74B||Avg. Daily Volume: 24,250,422||52 Week Range: $93.96 - $131.37|
2. Palo Alto Networks, Inc. (NYSE:PANW): $250.77
Shares of this computer security company were sold by 2 insiders:
- Director Mark D. McLaughlin sold 42,850 shares for $246.78, generating $10.57 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
- EVP, Chief Technology Officer Nir Zuk sold 30,000 shares for $247.28, generating $7.42 million from the sale.
|P/E: N/A||Forward P/E: 39||Industry P/E: 45.31|
|P/S: 9.23||Price/Book: 21.92||EV/EBITDA: 265.61|
|Market Cap: $23.94B||Avg. Daily Volume: 1,282,759||52 Week Range: $160.08 - $260.63|
3. Zscaler, Inc. (NASDAQ:ZS): $67.4
Shares of this software infrastructure company were sold by 4 insiders:
- Chief Strategy Officer Manoj Apte sold 95,544 shares for $66.91, generating $6.39 million from the sale. These shares were sold indirectly through a trust.
- CTO & EVP of Eng/Cloud Ops Amit Sinha sold 82,491 shares for $66.77, generating $5.51 million from the sale. These shares were sold indirectly through a trust.
- Chief Legal Officer Robert Schlossman sold 55,000 shares for $66.86, generating $3.68 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
- Director Karen Blasing sold 1,000 shares for $67.07, generating $67,071 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: 396.47||Industry P/E: 32.6|
|P/S: 34.44||Price/Book: 30.14||EV/EBITDA: -529.75|
|Market Cap: $8.37B||Avg. Daily Volume: 2,143,400||52 Week Range: $24.76 - $72.94|
4. BlackRock, Inc. (NYSE:BLK): $482.5
Shares of this asset management company were sold by 2 insiders:
- Chairman and CEO Laurence Fink sold 31,250 shares for $481.79, generating $15.06 million from the sale.
- Senior Managing Director Jeff A. Smith sold 75 shares for $479.40, generating $35,955 from the sale.
|P/E: 18.2||Forward P/E: 15.84||Industry P/E: 85.2|
|P/S: 5.37||Price/Book: 2.36||EV/EBITDA: 12.99|
|Market Cap: $75.01B||Avg. Daily Volume: 551,470||52 Week Range: $360.79 - $557|
5. The Charles Schwab Corporation (NYSE:SCHW): $46.24
Chairman Charles R. Schwab sold 306,280 shares of this investment brokerage for $46.02, generating $14.09 million from the sale. These shares were sold indirectly through a trust.
|P/E: 17.85||Forward P/E: 15.41||Industry P/E: 14.49|
|P/S: 5.9||Price/Book: 3.45||EV/EBITDA: N/A|
|Market Cap: $61.69B||Avg. Daily Volume: 6,387,793||52 Week Range: $37.83 - $60.22|
You can view the full list of sales from this Insider Sales page.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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: 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.