Insider Weekends: Déjà Vu

Investors sometimes believe that they should focus almost exclusively on what is going on with a company to inform their investment decisions and not pay much attention to the macro environment. This approach may work at times but can be detrimental when the macro environment is in a state of flux, where entire economies or industries might be impacted by the prevailing winds of change. We are very much in such an environment right now with the specter of higher interest rates on the horizon even as the West watches the Russian invasion of Ukraine. There are always pockets of opportunity even in a challenging macro environment (banks have done very well recently and so have commodities) and if you are not inclined to buy at the moment, you can continue to add to your watchlist. Having a well groomed watchlist on the ready can be invaluable when conditions turn favorable and allows you to act quickly to take advantage of the opportunity.

Reviewing the list of insider purchases this weekend, it felt like déjà vu and I had to go back to check to make sure I was editing the right post and had not inadvertently started editing an old one. Some of the companies on the list this week also saw insider buying in the week prior and we have discussed others in recent weeks. The purchase that caught my eye this week was the one by independent director Warren Stephens of the retail chain Dillard’s (NYSE: DDS). Mr. Stephens purchased 20,000 shares of Dillard’s for $4.61 million. He is the CEO of the privately held investment bank Stephens. Founded in 1933 and based in Little Rock, Arkansas, Stephens took a small Arkansas-based discount retailer called Walmart public in 1970.

Mr. Stephens has been on Dillard’s board for nearly 20 years and when an independent director with an investing background makes an opportunistic purchase, I take notice. Mr. Stephen’s net worth is estimated at $2.9 billion and this purchase is a drop in the bucket for him but it signals confidence in the company considering his last purchase was in 2018 at much lower prices. He also purchased 100,000 shares of Dillard’s during the Great Recession in November 2007 for $17.52. While he was early with that purchase, as insiders usually are, Dillard’s went on to do very well coming out of that recession with gains of over 1,200% since his purchase compared to a gain of 196% for the S&P 500. It is also encouraging that Dillard’s announced a new $500 million buyback, representing nearly 10% of the company’s market cap when the buyback was announced on February 24, 2022. Last quarter Dillard’s announced a $15 per share special dividend that was payable to shareholders on December 15, 2021.

Dillard’s Social (source: Dillard’s website)

The company has no net debt on the balance sheet even after including capitalized leases and trades at a very low valuation of 4.3 times trailing EBITDA and a trailing P/E of 6.54. Retailers have benefited greatly from stimulus fueled increased consumer spending and from an omni-channel presence but the future may not be as favorable as the recent past. Earnings for each of the next two fiscal years are expected to decline sharply and Seeking Alpha author Adam Levine-Weinberg does a great job of outlining why the stock may be a value trap in this article.

Welcome to edition 608 of Insider Weekends. Insider buying increased last week with insiders purchasing $154.36 million of stock compared to $154.03 million in the week prior. Selling decreased to $815.51 million compared to $946.14 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 dropped to 5.28. In other words, insiders sold more than 5 times as much stock as they purchased. The Sell/Buy ratio this week was favorable compared to the prior week when the ratio stood at 6.14.

If you found this article informative and would like to receive Insider Weekends by email every weekend, click here to subscribe for free.

Notable Insider Buys:

1. EverQuote, Inc. EVER: $13.98

Director David B. Blundin acquired 1,004,016 shares of this online marketplace for insurance shopping, paying $14.94 per share for a total amount of $14.99 million. These shares were purchased indirectly by Recognition Capital, LLC.

You can view the list of recent insider transactions for EverQuote, Inc. here.

P/E: N/A Forward P/E: -21.84 Industry P/E: 22.46 P/S: 0.99 Price/Book: 4.81 EV/EBITDA: -24.01 Market Cap: $413.58M Avg. Daily Volume: 377,791 52 Week Range: $11.725 – $50.5

2. IAA, Inc. IAA: $36.72

Director Peter Kamin acquired 189,100 shares of this auction solutions provider for total loss, damaged, and low-value vehicles, paying $35.36 per share for a total amount of $6.69 million. These shares were purchased indirectly by various entities.

You can view the list of recent insider transactions for IAA, Inc. here.

P/E: 16.84 Forward P/E: 15.3 Industry P/E: 54.71 P/S: 2.69 Price/Book: 14.82 EV/EBITDA: 12.91 Market Cap: $4.95B Avg. Daily Volume: 1,268,906 52 Week Range: $32.74 – $64.55

3. Dillard’s, Inc. DDS: $265.92

Director Warren A. Stephens acquired 20,000 shares of this retail chain, paying $230.51 per share for a total amount of $4.61 million. These shares were purchased indirectly by Stephens Investments Holdings LLC.

You can view the list of recent insider transactions for Dillard’s, Inc. here.

P/E: 6.35 Forward P/E: 16.29 Industry P/E: 13.86 P/S: 0.78 Price/Book: 3.44 EV/EBITDA: 3.63 Market Cap: $5.17B Avg. Daily Volume: 272,239 52 Week Range: $79.06 – $416.71

4. Newmark Group, Inc. NMRK: $18

Chairman Howard W. Lutnick acquired 126,500 shares of this real estate services company, paying $16.63 per share for a total amount of $2.1 million. These shares were purchased indirectly by CF Group Management, Inc.

You can view the list of recent insider transactions for Newmark Group, Inc. here.

P/E: 4.74 Forward P/E: 8.96 Industry P/E: 61.53 P/S: 1.32 Price/Book: 2.06 EV/EBITDA: 28.06 Market Cap: $3.83B Avg. Daily Volume: 1,319,195 52 Week Range: $9.35 – $19.1

5. Mohawk Industries, Inc. MHK: $144.27

President and COO Chistopher Wellborn acquired 10,000 shares of this home flooring products company, paying $135.76 per share for a total amount of $1.36 million. Mr. Wellborn increased his stake by 7.16% to 149,747 shares with this purchase.

You can view the list of recent insider transactions for Mohawk Industries, Inc. here.

P/E: 2.89 Forward P/E: 8.35 Industry P/E: 10.6 P/S: 0.87 Price/Book: 1.15 EV/EBITDA: 5.93 Market Cap: $9.77B Avg. Daily Volume: 616,655 52 Week Range: $132.02 – $231.8

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

Notable Insider Sales:

1. Bunge Limited BG: $105.19

Director Paul J. Fribourg sold 400,000 shares of this agribusiness and food company, for $99.87, generating $39.95 million from the sale. These shares were sold indirectly by Continental Grain.

You can view the list of recent insider transactions for Bunge Limited here.

P/E: 7.82 Forward P/E: 12.2 Industry P/E: 20.42 P/S: 0.25 Price/Book: 2.04 EV/EBITDA: 8.42 Market Cap: $14.78B Avg. Daily Volume: 1,075,232 52 Week Range: $71.73 – $105.29

2. Omega Flex, Inc. OFLX: $146

Shares of this flexible metal hoses and accessories manufacturer were sold by 3 insiders:

  • Chief Operating Officer Mark F. Albino sold 40,517 shares for $137.72, generating $5.58 million from the sale.
  • Director Stewart B. Reed sold 40,517 shares for $137.72, generating $5.58 million from the sale.
  • Chairman & CEO Kevin R. Hoben sold 40,517 shares for $137.72, generating $5.58 million from the sale.

You can view the list of recent insider transactions for Omega Flex, Inc. here.

P/E: 57.17 Forward P/E: N/A Industry P/E: 20.59 P/S: 11.68 Price/Book: 26.42 EV/EBITDA: 43.36 Market Cap: $1.47B Avg. Daily Volume: 14,218 52 Week Range: $109 – $179.49

3. The Charles Schwab Corporation SCHW: $85.75

Chairman Charles R. Schwab sold 156,860 shares of Charles Schwab for $85.93, generating $13.48 million from the sale. These shares were sold indirectly by a trust.

You can view the list of recent insider transactions for The Charles Schwab Corporation here.

P/E: 30.3 Forward P/E: 17.79 Industry P/E: N/A P/S: 8.75 Price/Book: 3.41 EV/EBITDA: N/A Market Cap: $162.12B Avg. Daily Volume: 7,606,891 52 Week Range: $62.33 – $96.24

4. DoorDash, Inc. DASH: $100.34

Shares of this online food delivery platform were sold by 7 insiders:

  • Chief Financial Officer Prabir Adarkar sold 66,102 shares for $95.28, generating $6.29 million from the sale.
  • President and COO Christopher D. Payne sold 22,787 shares for $95.13, generating $2.17 million from the sale.
  • Chief Business Officer Keith Yandell sold 16,894 shares for $95.04, generating $1.61 million from the sale.
  • Director Andy Fang sold 7,753 shares for $95.10, generating $737,302 from the sale.
  • Chief Accounting Officer Gordon S. Lee sold 5,983 shares for $94.78, generating $567,058 from the sale.
  • Director Stanley Tang sold 4,323 shares for $94.83, generating $409,941 from the sale.
  • General Counsel and Secretary Tia Sherringham sold 1,604 shares for $94.68, generating $151,863 from the sale.

You can view the list of recent insider transactions for DoorDash, Inc. here.

P/E: N/A Forward P/E: -233.35 Industry P/E: 34.07 P/S: 7.04 Price/Book: 7.41 EV/EBITDA: -94.35 Market Cap: $34.42B Avg. Daily Volume: 5,290,737 52 Week Range: $85.177 – $257.25

5. Palantir Technologies Inc. PLTR: $11.47

Shares of Palantir were sold by 5 insiders:

  • President and Secretary Stephen Andrew Cohen sold 345,018 shares for $10.70, generating $3.69 million from the sale.
  • Chief Operating Officer and Executive Vice President Shyam Sankar sold 266,872 shares for $10.70, generating $2.85 million from the sale.
  • Chief Financial Officer and Treasurer David A. Glazer sold 201,190 shares for $11.07, generating $2.23 million from the sale.
  • Chief Legal and Business Affairs Officer Ryan D. Taylor sold 162,500 shares for $10.95, generating $1.78 million from the sale.
  • Chief Accounting Officer Jeffrey Buckley sold 34,000 shares for $10.59, generating $359,923 from the sale.

You can view the list of recent insider transactions for Palantir Technologies Inc. here.

P/E: N/A Forward P/E: 42.48 Industry P/E: 53.71 P/S: 15.1 Price/Book: 10.07 EV/EBITDA: -54.36 Market Cap: $23.29B Avg. Daily Volume: 50,093,583 52 Week Range: $9.74 – $29.29

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

Posted In: contributorsSmall CapMarketsTrading Ideas