Executive Chair Bill Ford picked up $4.5 million worth of Ford stock on the open market last week.
Automotive part manufacturer LCI Industries saw a cluster of three insiders purchase shares.
Insiders are buying ahead of an earnings related blackout period.
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I was recently listening to Barry Ritholtz’s Masters in Business podcast interview with Darren Palmer, the VP of Ford’s Global EV Program, and he discusses the development of Ford’s first three all electric vehicles, including the Mustang Mach-E and the Ford F-150 Lightning truck. It was a fascinating interview and provided insights into how Ford plans to position the company for an electrified future by splitting the company into an electric division called the Model E and the legacy business continuing on as Ford Blue. While General Motors (GM) had a significant head start on Ford (NYSE:F) with electric vehicles like the Volt and Bolt and upcoming vehicles like the Hummer EV and the stunning Cadillac LYRIQ, it looks like Ford has a big hit on its hands with the Mustang Mach-E, which was selected by Consumer Reports as its top electric vehicle pick.
Executive Chair Bill Ford picked up $4.5 million worth of Ford stock on the open market last week and this follows his $8.5 million purchase in December. Both purchases were indirect purchases through a trust. We wrote the following on December 18, 2021 about Ford after his previous purchase:
When looking the investment landscape early last year when the COVID-19 pandemic started unfolding around us and even earlier this year, little did I anticipate that some of the biggest gainers this year would be auto stocks. I was more focused on companies like Berkshire Hathaway (BRK.A) that were positioned to do well if we saw sector or style rotation as discussed in this Twitter thread. Auto manufacturers have had a great year, benefiting from a combination of,
increased demand from consumers flush with cash, as you can see from the following M2 money supply chart
higher prices for both used and new cars
historically low interest rates and lax lending standards
The biggest beneficiary of these trends this year has been Ford (F), which has seen its stock shoot up nearly 125% this year as you can see from the chart below. The company’s all electric Ford Mach-E has been a big hit and is benefiting from the fact that Ford electric vehicles are still eligible for the $7,500 federal tax credit. When I was considering a second electric vehicle earlier this year to replace an old gas guzzler, the Mach-E was near the top of my list and the wait time then was more than 3 months. It looks like the wait time has now increased to 20+ weeks and the Premium and GT models now have a wait time of 28+ weeks. This increase in wait time is interesting considering the company indicated during its third quarter 2021 earnings call that it has seen a significant increase in semiconductor availability. The much anticipated electric F-150 truck is expected to launch in Spring 2022.
The company saw a big increase in its operating cash flow in Q3 to $7.7 billion, reinstated its quarterly dividend at 10 cents a share and raised its full year guidance to between $10.5 billion and $11.5 billion in operating earnings. The stock trades at a forward 2022 P/E of 10 and a forward EV/EBITDA of 15. Investors that may get turned off by the large net debt on Ford’s balance sheet should consider that a majority of it is from its financing arm. The company’s financing division has $122.52 billion of debt and liabilities partially offset by $106.37 billions of loans and leases. Ford has $25.62 billion in other debt that is more than offset by $31.42 billion of cash and short-term investments. The quality of the underwriting in its financing division is a key risk given the size of their liabilities.
Ford, GM, Tesla and Ferrari YTD Stock Chart (Yahoo Finance)
Another interesting purchase last week was at an automotive part manufacturer LCI Industries (LCII), which saw a cluster of three insiders purchase shares. As an OEM manufacturer that supplies the RV industry among others, it is benefiting from strong RV and automotive sales. Margins are low as expected but growth in both the top line and the bottom line have been impressive with the company reporting record sales of $4.5 billion for 2021, up 60% year-over-year. Net income increased even more, up 82% from 2020. When the company reported results in February, they indicated they had strong January sales and estimates for Q1 and Q2 2022 are both every high. It makes sense that the insiders are buying ahead of an earnings related blackout period.
Insider buying decreased last week with insiders purchasing $54.4 million of stock compared to $71.35 million in the week prior. Selling, on the other hand, increased to $1.42 billion compared to $879.41 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 went up to 26.03. In other words, insiders sold more than 26 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 12.33.
Shares of this battery-grade metals explorer were acquired by 4 insiders:
Director Andrei Karkar acquired 2,085,000 shares, paying $2.40 per share for a total amount of $5.01 million. These shares were purchased indirectly by ERAS Capital LLC.
Director Andrew Hall acquired 28,000 shares, paying $2.13 per share for a total amount of $59,713.
Chief Executive Officer Gerard Barron acquired 23,000 shares, paying $2.19 per share for a total amount of $50,370. Mr. Barron increased his stake by 0.15% to 15,291,809 shares with this purchase.
Chief Financial Officer Craig Shesky acquired 15,000 shares, paying $1.80 per share for a total amount of $26,979. Mr. Shesky increased his stake by 2.26% to 678,316 shares with this purchase.
Executive Chairman William Clay Ford acquired 267,697 shares of Ford Motor Company, paying $16.81 per share for a total amount of $4.49 million.
"As pointed out by an astute reader, the shares purchased were Class B shares and could not have been an open market purchase. The indirect purchase for a trust is likely from a family member since class B shares are only available to Ford family members."
Shares of this manufacturer of engineered products for transportation and recreational vehicles were acquired by 3 insiders:
Director James Gero acquired 10,000 shares, paying $105.52 per share for a total amount of $1.06 million. Mr. Gero increased his stake by 3.29% to 314,192 shares with this purchase.
President & CEO Jason Lippert acquired 9,265 shares, paying $108.00 per share for a total amount of $1 million. Mr. Lippert increased his stake by 3.20% to 298,992 shares with this purchase.
Group President – Aftermarket Jamie Schnur acquired 3,250 shares, paying $107.79 per share for a total amount of $350,318. Mr. Schnur increased his stake by 19.19% to 20,182 shares with this purchase.
President and CEO Vicki A. Hollub acquired 14,191 shares of this oil and gas properties exploration and production company, paying $56.24 per share for a total amount of $798,102. Mr. Hollub increased his stake by 3.13% to 467,282 shares with this purchase.
Shares of this biotech company were acquired by 2 insiders:
Director Grant Verstandig acquired 190,600 shares, paying $3.94 per share for a total amount of $750,274. Mr. Verstandig increased his stake by 26.66% to 905,495 shares with this purchase.
President and CEO Kristi Jones acquired 10,000 shares, paying $3.74 per share for a total amount of $37,400. Mr. Jones increased his stake by 15.85% to 73,078 shares with this purchase.
P/E: N/A
Forward P/E: -2.97
Industry P/E: 85.93
P/S: N/A
Price/Book: 1.22
EV/EBITDA: -0.38
Market Cap: $101.87M
Avg. Daily Volume: 177,534
52 Week Range: $1.72 – $26.5
You can view the full list of purchases from this Insider Buying page.
Shares of this medical technology company were sold by 2 insiders:
CEO and President Timothy P. Herbert sold 130,000 shares for $250.52, generating $32.57 million from the sale. 130,000 of these shares were sold indirectly through a trust.
Director Marilyn C. Nelson sold 15,000 shares for $255.01, generating $3.83 million from the sale. These shares were sold indirectly by GDN Holdings, LLC.
Director Tench Coxe sold 100,000 shares of this semiconductor company for $274.06, generating $27.41 million from the sale. These shares were sold indirectly by a trust.
Shares of this asset management company were sold by 3 insiders:
Chairman and CEO James M. Cracchiolo sold 56,622 shares for $314.16, generating $17.79 million from the sale.
Executive VP AND CFO Walter Stanley Berman sold 8,711 shares for $312.01, generating $2.72 million from the sale.
President – Insurance & Annuities Gumer Alvero sold 2,044 shares for $314.30, generating $642,425 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
Director William P. Foley II sold 1,535,429 shares of this cloud-based provider of integrated digital human capital and business solutions worldwide for $10.30, generating $15.82 million from the sale. 515,449 of these shares were sold indirectly by Bilcar FT, LLC.
P/E: 142.27
Forward P/E: 13.04
Industry P/E: 26.79
P/S: 3.27
Price/Book: 1.05
EV/EBITDA: 18.06
Market Cap: $5.08B
Avg. Daily Volume: 2,826,315
52 Week Range: $8.39 – $13.34
You can view the full list of sales from this Insider Sales page.
Insiders Sell For Various Reasons But Only Buy For One Reason, They Expect The Stock To Go Up.
This is especially true for insiders of recent spinoffs. We do the hard work for you by combing through hundreds of insider purchases each year to find the best opportunities. Insiders sometimes buy to "signal" the market and make mistakes because of their myopic focus on their company/industry. We cut through the noise and use insider buying as an idea discovery tool.
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Asif Suria is an entrepreneur and investor with a professional background in technology and a focus on event driven strategies including: merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. Asif has been actively investing for over 20 years and sharing his ideas for the past 10.
He is the leader of the investing group Inside Arbitrage where he shares investment ideas rarely found in mainstream financial press. Inside Arbitrage provides access to six different event-driven strategies to expand your investing toolbox, special situations focused tools, qualitative writeups of ideas through weekly articles, and a comprehensive monthly newsletter. Learn more.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of BRK.B either through stock ownership, options, or other derivatives. 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.
Disclaimer: I hold a long position in Berkshire Hathaway (BRK.B). 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.
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It seems my previous post was improperly deleted. In summary:"Executive Chair Bill Ford picked up $4.5 million worth of Ford stock on the open market last week."This is absolutely FALSE.The SEC Form 4 (linked below) clearly shows that on March 28th Bill Ford purchased 267,697 shares of CLASS B preferred Ford Family shares from another Ford Family member, and added them to his own Family Trust Fund. These are not Class A Common shares that are purchased on the "open market".The suggestion that Bill Ford used insider information to which he had access and purchased common shares in expectation of gains based on such information is absolutely false. And doing so could result in $5 million in fines and 20 years in a federal penitentiary, under the Insider Trading Act.d18rn0p25nwr6d.cloudfront.net/...
@Tdot I see from the filing that he did pick up class B shares and that he did so indirectly through a trust as indicated in the footnotes of the filing. You are actually right that this was not an open market purchase because class B shares are not available to buy on the open market. Thanks for bringing this to my attention. We will get the article corrected.
You too were simply the victim of lazy reporting at Bloomberg, I think it was, which incorrectly reported the share purchase in the first place. Many many more articles in the media were spun off from that crappy reporting, and the associated assumption that Bill Ford "must know something" if he is buying up millions of dollars in Ford shares on the "open market", speculating that he knows the chip shortage is coming to an end, or some other thing that would presumably boost Ford's share price.Bill Ford and Ford's corporate attorneys are way too smart than to allow illegal insider trading to happen at the top of the company, which would immediately spawn SEC investigations and most likely the jailing of the Executive Chairman and anyone else that might be involved.It may do well here to point out that inside information is material corporate information that has not been made available to public. If someone obtains unpublished insider information, and then buys or sells shares on that bases to try to benefit from that information, that is illegal insider trading. Nevertheless, a corporate insider buying or selling shares does not imply that "they must know something". If they did "know something", then they would have to wait until that news is formally released to the public in media press releases and filed with the SEC, only then they can trade shares fairly along with anyone else in the public.
Asif, Enjoy your weekly recaps. Quick question which you’ve probably answered dozens of times but since I don’t know, I’m asking again. Do your numbers exclude option transactions, i.e. are they all open market buys and sells?
@Sportsbiz Thank you. Glad to hear you like them. Yes, the purchases and sales both exclude option exercises. We also look at the footnotes to see if we can identify ones that were done through private placements and attempt to exclude those as well. Check out this page regarding insider transactions for Ford and you will notice that we did not report on all the option exercises in our Insider Weekends article: www.insidearbitrage.com/...
Yet the stock is still falling. What does that tell you? Besides buying $4.5 million of F shares for someone who has more millions than he can count isn’t a sign of confidence. He could be simply shoring it from hitting 2020 low of $4.50 …!
@AbuAdam I would love to be able to buy it anywhere close to the March 2020 lows. Unfortunately I don't think that is likely anytime soon. I don't think Bill or anyone else is likely to move Ford's stock price on account of insider transactions.
@Asif Suria insider buying for an owner with millions or billions does not mean a thing. Not to me anyways. Elon Musk has shown time and again that he is a visionary who can make things happen. ICE companies were in business long before Tesla. But what have they achieved in the EV space. Tesla last year sold close to a million EV, and this year on track to top that. When will Ford will deliver the F150 and how many? In any case, there is wisdom in the adage “follow the leader”.
@Jlexus1953 falling, yes but not on company fundamentals but on reasons outside their control that are expected to dissipate through the year. This is normally a buying opportunity. Once it turns it will ramp quickly, but yes you may have some dead money or even losses for a several months. But I cant time the bottom or top, so is a 50%+ gain in the next 9-15 months worth it. To me, YES. But F as well as GM are at the mercy of supply chains.
F is a long long shot. Currently, F continues to plummet day after day... Reading the comments from "Is Ford Stock Nearing A Buying Point At Its Current Valuation?", I foresee that F is not currently in favor for stock investors... Bill Ford will not reverse F current trend in short term.Like
@IreneKat Yep, the last 60 days F has bounced around and between a $16-18 trading range - most in the middle ~$17.Quite the “plummet day after day”. It’s $16.70 as I type.
@IreneKat I don't expect him to. Insider buying is a great way to discover or rediscover companies and is only one tool in an investor's toolbox. The stock has been settling down after the big run up. The supply chain issues will eventually resolve themselves. At the end of the day it will be the quality of their products, their capital allocation and their strategic decisions that will guide the stock in the long-term.
@IreneKat You have traders and you have investors. Tow totally different groups with different financial objectives.. A trader and an investors seldom see eye to eye..
F. He isnt buying for this qtr or next. He is buying for the future when supply chain issues dissipate. That is when F goes back up toward $30. Question is how much pressure is put on F in the upcoming qtrs. Does it stay between $15-$17 for now or drop to $12-$13 as current news seems to dictate price vs actual long term value of a company. I want to add around $13.50. Hoping a bit more negative news allows this to happen.
