Seeking Alpha

Insider Weekends: Richard Kinder Buys Kinder Morgan Again Near The $20 Level

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Includes: AGO, ALGT, FB, FDX, GRMN, KMI, OPK, QSR, TPX, TTS
by: Asif Suria
Asif Suria
Long/short equity, event-driven, insider ownership, investment advisor
Summary

Insider buying increased significantly last week.

Notable Insider Buys: Kinder Morgan, Inc., Assured Guaranty Ltd., FedEx Corporation, OPKO Health, Inc., Tile Shop Holdings, Inc.

Notable Insider Sells: Facebook, Inc., Garmin Ltd., Tempur Sealy International, Inc., Allegiant Travel Company, Restaurant Brands International Inc.

Insider buying increased significantly last week with insiders purchasing $206.8 million of stock last week compared to $55.06 million in the week prior. Selling also more than doubled with insiders selling $1.29 billion of stock last week compared to $425.06 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 declined to 6.24. In other words, insiders sold more than 6 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week when the ratio stood at 7.72.

Insider Sector Heat Map November 1, 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. Kinder Morgan, Inc. (KMI): $20.5

Executive Chairman Richard D. Kinder acquired 600,000 shares of this oil & gas pipelines company, paying $20.09 per share for a total amount of $12.06 million. Mr. Kinder increased his stake by 0.25% to 242,479,496 shares with this purchase.

Mr. Kinder has been active buyer of Kinder Morgan every time the stock has dipped to around $20 or below. The stock was below $20 for the first half of this year and he was a very active buyer then. He also purchased 700,000 shares for $13.91 million in late August.

We wrote the following about Kinder Morgan in February of this year,

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.

Revenue has declined in each of the last two quarters and the company missed both top line and bottom line estimates. After cutting its dividend in 2016, the company is once again growing its dividend payout and the annual payout now is $1, translating to a 4.88% yield at a 103% payout ratio.

P/E: 22.58 Forward P/E: 19.9 Industry P/E: 12.65
P/S: 3.4 Price/Book: 1.38 EV/EBITDA: 13.3
Market Cap: $46.43B Avg. Daily Volume: 36,510,287 52 Week Range: $14.62 - $21.5

2. Assured Guaranty Ltd. (AGO): $47.27

Chief Investment Officer Andrew T. Feldstein acquired 45,700 shares of this insurance company, paying $46.97 per share for a total amount of $2.15 million. Mr. Feldstein increased his stake by 23% to 244,200 shares with this purchase.

P/E: 11.21 Forward P/E: 14.15 Industry P/E: 349.36
P/S: 4.78 Price/Book: 0.7 EV/EBITDA: N/A
Market Cap: $4.67B Avg. Daily Volume: 1,093,616 52 Week Range: $36.13 - $47.97

3. FedEx Corporation (FDX): $156.52

Director John A. Edwardson acquired 10,000 shares of FedEx, paying $154.13 per share for a total amount of $1.54 million. Mr. Edwardson increased his stake by 17.25% to 67,966 shares with this purchase.

Mr. Edwardson was appointed to FedEx's board in 2003. This is his first insider purchase since we started tracking insider data nearly a decade ago. Besides option exercises, his last insider transaction was a sale of 1,160 shares in September 2018 at an average price of $242.35.

After double digit revenue growth through the better part of last year, revenue growth decelerated significantly this year for FedEx and revenue last quarter was essentially flat year-over-year. FedEx deciding not to renew one of their contracts with Amazon combined with weak global macro economical factors hurt their top line. The company reduced both its top line and bottom line forecasts for fiscal 2020 and now sees earnings of $11 to $13 for this fiscal year ending May 2020.

P/E: 91.96 Forward P/E: 11.24 Industry P/E: 24.32
P/S: 0.59 Price/Book: 2.25 EV/EBITDA: 14.48
Market Cap: $40.84B Avg. Daily Volume: 5,827,804 52 Week Range: $137.78 - $234.49

4. OPKO Health, Inc. (OPK): $1.5

CEO & Chairman Phillip Frost M.D. acquired 800,000 shares of this devices and drug development company, paying $1.43 per share for a total amount of $1.15 million. These shares were purchased indirectly by Frost Gamma Investments Trust.

P/E: N/A Forward P/E: -6.52 Industry P/E: 349.36
P/S: 1.08 Price/Book: 0.54 EV/EBITDA: -9.05
Market Cap: $998.4M Avg. Daily Volume: 11,198,323 52 Week Range: $1.33 - $3.94

5. Tile Shop Holdings, Inc. (TTS): $1.7

Director Peter Kamin acquired 426,295 shares of this home improvement products retailer, paying $1.77 per share for a total amount of $756,277. Mr. Kamin increased his stake by 17.84% to 2,815,306 shares with this purchase. 239,049 of these shares were purchased indirectly by various trusts and entities.

P/E: N/A Forward P/E: 34 Industry P/E: 24.39
P/S: 0.25 Price/Book: 0.64 EV/EBITDA: 8.52
Market Cap: $86.38M Avg. Daily Volume: 5,664,695 52 Week Range: $1 - $7.99

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $193.62

COB and CEO Mark Zuckerberg sold 628,000 shares of Facebook for $187.67, generating $117.85 million from the sale. These shares were sold indirectly by various entities.

P/E: 30.95 Forward P/E: 20.58 Industry P/E: 29.90
P/S: 8.3 Price/Book: 5.88 EV/EBITDA: 17.89
Market Cap: $552.39B Avg. Daily Volume: 78,021,441 52 Week Range: $123.02 - $208.66

2. Garmin Ltd. (GRMN): $94.46

Shares of this GPS manufacturer were sold by 2 insiders:

  • Executive Chairman Min H. Kao sold 411,428 shares for $93.92, generating $38.64 million from the sale. These shares were sold indirectly by Mr. Kao's children.
  • President and CEO Clifton A. Pemble sold 7,430 shares for $93.75, generating $696,562 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
P/E: 23.04 Forward P/E: 21.97 Industry P/E: 18.60
P/S: 5.01 Price/Book: 4.1 EV/EBITDA: 16.84
Market Cap: $17.96B Avg. Daily Volume: 3,521,493 52 Week Range: $59.98 - $96.44

3. Tempur Sealy International, Inc. (TPX): $89.35

Shares of this mattress company were sold by 3 insiders:

  • CEO & President Scott L. Thompson sold 100,000 shares for $89.61, generating $8.96 million from the sale.
  • EVP Global Business Strategy David Montgomery sold 40,000 shares for $90.19, generating $3.61 million from the sale.
  • EVP & President, North America Richard W. Anderson sold 21,296 shares for $84.50, generating $1.79 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
P/E: 39.57 Forward P/E: 16.55 Industry P/E: 18.60
P/S: 1.74 Price/Book: 16.06 EV/EBITDA: 17.13
Market Cap: $4.9B Avg. Daily Volume: 5,582,835 52 Week Range: $38.9 - $92.33

4. Allegiant Travel Company (ALGT): $167.77

CEO and Chairman Maurice J. Gallagher Jr. sold 75,000 shares of this airline for $164.40, generating $12.33 million from the sale.

P/E: 12.81 Forward P/E: 10.68 Industry P/E: 10.33
P/S: 1.53 Price/Book: 3.25 EV/EBITDA: 8.34
Market Cap: $2.74B Avg. Daily Volume: 438,381 52 Week Range: $98.18 - $173

5. Restaurant Brands International Inc. (QSR): $65.21

President, Tim Hortons, Alexandre Macedo sold 166,834 shares of this restaurants chain for $64.45, generating $10.75 million from the sale.

P/E: 26.5 Forward P/E: 21.88 Industry P/E: 25.08
P/S: 3.55 Price/Book: 8.24 EV/EBITDA: 15.36
Market Cap: $19.56B Avg. Daily Volume: 5,161,338 52 Week Range: $50.2 - $79.46

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.

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.