- Insiders purchased 11 times more stock last week than they purchased in the week prior.
- Musk sold $8.52 billion of Tesla to fund his acquisition of Twitter.
- Four different insiders of Warner Bros. Discovery purchased shares on the open market, including the CEO and CFO.
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In a month where we experienced the worst monthly drop in the Nasdaq since 2008 and where the big tech companies that were holding up the indexes also dropped, insiders stepped up as we expected to buy a significant amount of stock last week. Insiders purchased 11 times more stock last week than they purchased in the week prior. The $463 million of purchases were also significantly above the $6 million of purchases we saw during the same week in April 2021 and $15 million of purchases during the last week of April 2020.
The number is unusually high last week because the father-son duo Ernest Garcia II and Ernest Garcia III purchased shares of online car dealer Carvana (CVNA) in a secondary offering. They collectively purchased $364 million in a secondary offering but their purchases pale in comparison to the elder Garcia’s $1.15 billion of sales of Carvana in 2020 and $2.25 billion of sales in 2021 as you can see here. The stock has been under pressure lately as it launched a $1.25 billion secondary offering to sell class A shares and Apollo Global stepped in to pick up half of the $3.275 billion in debt it was trying to sell at a high yield of 10.25%. Carvana needed the capital to fund its $2.2 billion acquisition of KAR Global’s auction business. The stock is down more than 80% from a peak of over $370 last August.
The other big event last week was Elon Musk’s acquisition of Twitter (TWTR) in a deal financed through $13 billion in debt from banks, $12.5 billion through a margin loan on his Tesla (NASDAQ:TSLA) shares and an additional $21 billion in equity financing from him. Toward this end, he sold 9.645 million shares of Tesla generating $8.52 billion from the sales. We discussed his sales of Tesla late last year in an article titled The Pied Piper Is Heading Out Of Town.
Insider buying increased significantly last week with insiders purchasing $462.93 million of stock compared to $41.43 million in the week prior. Selling also increased significantly to $8.98 billion compared to $704.53 million in the week prior.
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 19.39. In other words, insiders sold more than 19 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 17.
Notable Insider Buys:
1. The Charles Schwab Corporation (SCHW): $66.33
CEO Walter W. Bettinger acquired 140,000 shares of Charles Schwab, paying $68.10 per share for a total amount of $9.53 million. Mr. Bettinger increased his stake by 47.84% to 432,625 shares with this purchase.
|P/E: 23.44||Forward P/E: 13.19||Industry P/E: 12.77|
|P/S: 6.79||Price/Book: 2.71||EV/EBITDA: N/A|
|Market Cap: $125.72B||Avg. Daily Volume: 8,680,220||52 Week Range: $65.73 – $96.24|
2. Warner Bros. Discovery, Inc. (WBD): $18.15
Shares of Warner Bros. Discovery were acquired by four insiders:
- Director Robert R. Bennett acquired 53,000 shares, paying $18.88 per share for a total amount of $1 million. Mr. Bennett increased his stake by 544.32% to 62,737 shares with this purchase.
- Chief Executive Officer & President David Zaslav acquired 50,200 shares, paying $19.93 per share for a total amount of $1 million. Mr. Zaslav increased his stake by 1.24% to 4,093,530 shares with this purchase.
- Chief Financial Officer Gunnar Wiedenfels acquired 25,000 shares, paying $19.95 per share for a total amount of $498,750. Mr. Wiedenfels increased his stake by 5.48% to 481,527 shares with this purchase.
- Chief Corp Affairs Officer David Leavy acquired 6,866 shares, paying $18.33 per share for a total amount of $125,854. Mr. Leavy increased his stake by 4.28% to 167,176 shares with this purchase.
|P/E: 13.17||Forward P/E: 11.27||Industry P/E: 61.47|
|P/S: 3.61||Price/Book: 1.03||EV/EBITDA: 6.87|
|Market Cap: $44.05B||Avg. Daily Volume: 15,487,069||52 Week Range: $17.89 – $39.7|
3. Rocket Companies, Inc. (RKT): $8.85
Chief Executive Officer Jay Farner acquired 111,700 shares of this tech-driven real estate, mortgage, and e-Commerce company, paying $8.93 per share for a total amount of $998,019. Mr. Farner increased his stake by 6.17% to 1,922,407 shares with this purchase.
|P/E: 3.81||Forward P/E: 6.97||Industry P/E: 7.49|
|P/S: 1.33||Price/Book: 1.68||EV/EBITDA: 4.24|
|Market Cap: $17.59B||Avg. Daily Volume: 5,522,155||52 Week Range: $8.49 – $23.33|
4. Lam Research Corporation (LRCX): $465.76
Director Catherine P. Lego acquired 1,736 shares of this semiconductor equipment and materials company, paying $460.35 per share for a total amount of $799,168. Ms. Lego increased her stake by 3.60% to 49,991 shares with this purchase.
|P/E: 14.52||Forward P/E: 12.25||Industry P/E: 23.39|
|P/S: 3.91||Price/Book: 10.09||EV/EBITDA: 12.14|
|Market Cap: $64.61B||Avg. Daily Volume: 1,404,279||52 Week Range: $449.5 – $731.85|
5. Lions Gate Entertainment Corp. (LGF.B): $12.57
Director Harry Sloan acquired 50,000 shares of this movies and TV shows production and distribution company, paying $12.72 per share for a total amount of $636,000.
|P/E: N/A||Forward P/E: 17.36||Industry P/E: 61.47|
|P/S: 0.80||Price/Book: 1.05||EV/EBITDA: 3.60|
|Market Cap: $2.91B||Avg. Daily Volume: 644,506||52 Week Range: $10.53 – $18.77|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Tesla, Inc. (TSLA): $870.76
Shares of Tesla were sold by two insiders:
- CEO Elon Musk sold 9,645,000 shares for $883.09, generating $8.52 billion from the sale.
- SVP Powertrain and Energy Eng. Andrew D. Baglino sold 3,500 shares for $899.42, generating $3.15 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
|P/E: 177.67||Forward P/E: 54.76||Industry P/E: 20.97|
|P/S: 16.76||Price/Book: 29.8||EV/EBITDA: 96.38|
|Market Cap: $902.12B||Avg. Daily Volume: 25,105,831||52 Week Range: $546.98 – $1243.49|
2. Airbnb, Inc. (ABNB): $153.21
Shares of Airbnb were sold by three insiders:
- Chairman of Airbnb.org Joseph Gebbia sold 454,168 shares for $153.16, generating $69.56 million from the sale. 15,525 of these shares were sold as a result of exercisng options immediately prior to the sale.
- Director Belinda J. Johnson sold 20,000 shares for $168.98, generating $3.38 million from the sale.
- Director Jeffrey D. Jordan sold 12,000 shares for $156.69, generating $1.88 million from the sale. These shares were sold indirectly by a trust.
|P/E: N/A||Forward P/E: 75.47||Industry P/E: 2,585.66|
|P/S: 16.51||Price/Book: 20.33||EV/EBITDA: 171.24|
|Market Cap: $98.92B||Avg. Daily Volume: 5,737,847||52 Week Range: $129.71 – $212.584|
3. Snap Inc. (SNAP): $28.46
Shares of camera company were sold by two insiders:
- Chief Technology Officer Robert C. Murphy sold 900,000 shares for $29.55, generating $26.59 million from the sale.
- Chief Executive Officer Evan Spiegel sold 250,000 shares for $29.25, generating $7.31 million from the sale. These shares were sold indirectly by a trust.
|P/E: N/A||Forward P/E: 33.48||Industry P/E: 21.06|
|P/S: 11.31||Price/Book: 12.16||EV/EBITDA: -78.46|
|Market Cap: $46.57B||Avg. Daily Volume: 37,969,731||52 Week Range: $24.32 – $83.34|
4. Bentley Systems, Incorporated (BSY): $42.39
Director Raymond B. Bentley sold 631,387 shares of this infrastructure engineering software solutions provider for $42.23, generating $26.66 million from the sale.
|P/E: 141.3||Forward P/E: 46.58||Industry P/E: 53.96|
|P/S: 12.64||Price/Book: 31.9||EV/EBITDA: 85.15|
|Market Cap: $12.2B||Avg. Daily Volume: 954,217||52 Week Range: $34.45 – $71.92|
5. American Express Company (AXP): $174.71
Chairman and CEO Stephen J. Squeri sold 48,160 shares of American Express for $178.38, generating $8.59 million from the sale.
|P/E: 17.44||Forward P/E: 15.5||Industry P/E: 7.84|
|P/S: 3||Price/Book: 6||EV/EBITDA: N/A|
|Market Cap: $131.57B||Avg. Daily Volume: 4,025,590||52 Week Range: $149.89 – $199.55|
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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This article was written by
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 RKT, LGF.A 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 long positions in Rocket Companies (RKT) and Lions Gate Entertainment (LGF.A). 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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