Insider buying versus selling week of 3-15-19

Last week was another lackluster week for insider buying. It was mostly last week news but Berkshire Hathaway bought a little more Delta.  Large (10% )shareholders adjusted their holdings but the only purchases of interest by directors and officers of any companies are outlined below.

 

Buys

KMI Kinder Morgan  Chairman of the Board continues to peck out KMI buying $17.3million worth of this pipeline play at 52-week highs.  His buying has propelled the stock to 52-week highs while pipeline peer, Energy Transfer ET trades close to a 52 week low with a far higher dividend payment and excellent coverage ratios. We are scratching our head on this one.
ESGR Enstar Group CEO Silvester purchased $4.7 million at an average price of $169.88. Enstar Group Limited (ESGR) announced that it has signed an agreement with Maiden Holdings, Ltd. (MHLD) and Maiden Reinsurance Ltd., a subsidiary of Maiden. Pursuant to the agreement, an Enstar subsidiary will enter into an adverse development cover reinsurance agreement with respect to Maiden Re’s quota share reinsurance contracts with AmTrust Financial Services, Inc.  This is one related party transaction to avoid.
SUI Sun Communities Director bought $30.1 million at an average price of $117.84. Sun Communities, Inc. is a REIT that, as of September 30, 2018, owned, operated, or had an interest in a portfolio of 370 communities comprising over 127,000 developed sites in 31 states and Ontario, Canada. The stock has also been an excellent performer, nearly doubling over the last 30 months.
ATVI Activision Blizzard. Legendary gamer developer and director Peter Nolan bought $4.3 million at $42.95.Activision Blizzard shares are down nearly 50% in the past six months and investors should be “kicking the tires,” given an improving setup in late 2019 and 2020, Piper Jaffray analyst Michael Olson tells investors in a research note. The analyst sees five reasons to do the work on Activision, including: increasing near-term talk on streaming, potential E3 announcements, anticipation around improving fundamentals in 2020, management’s re-allocation of resources towards key franchises, and valuation. While it may still be early with a lack of new game catalysts in 2019, patient investors should consider “chipping away at a position” in the stock at current levels, Olson writes. He maintains an Overweight rating on Activision Blizzard with a $52 price target. :From the fly on the wall
FG FGL Holdings CEO Blunt purchased $1.0 million at $8.52.GL Holdings, through its subsidiaries, sells individual life insurance products and annuities in the United States. The company offers deferred annuities, including fixed indexed annuity contracts and fixed rate annuity contracts; immediate annuities; and life insurance products. It also provides life and annuity reinsurance services, such as reinsurance on asset intensive, long duration life, and annuity liabilities.
PBF PBF Energy CEO Nimbley purchased 25,000 shares of this small refiner at average prices of $30.03.  The Trump administration has been very friendly to refiners since early supporter Carl Icahn lobbied to have some onerous restrictions lifted but that was some time ago.
CVS CVS Health Corp Four insiders tried catching a falling knife by purchasing $1.7 million of CVS from prices as low as $52.71-to $56. Bernstein analyst Lance Wilkes started coverage of CVS Health with an Outperform rating and $76 price target. The analyst believes the current stock price does not reflect Aetna’s solid MCO business and the long-term value of a care delivery strategy at retail. Further, he thinks the current valuation already reflects potential shock to PBM margins and future deterioration in the retail business.
DBD DBD Diebold Nixdorf Inc –  Three insiders bought $456.7K of this iconic lockbox and ATM vendor. Diebold made a disastrous purchased of Nixdorf last year and the stock reflected going concerns issues. It’s come roaring back and now insiders are buying at twice the price it was trading at last year.
BCO Brinks Two insiders purchased$946.4K worth of armored car delivery company.  This has been a cost-cutting and efficiency story over the last few years that seems to have stalled out. Not sure what is causing the renewed insider interest.
D Dominion Energy Two board members dramatically increased their ownership of this Mid Atlantic utility giant with a $650k purchase.  D has one of the highest yields in the utility group.  We have owned it from time to time and have always made money but it’s been a trading stock.
Sales

Insiders always find ways to sell with  “planned sales” which in reality is just a legal loophole around the SEC restrictions on insider selling during earnings blackout periods.  Some of the more notable ones are described below.

CBRE CBRE Group Insiders couldn’t restrain themselves, five of them selling $337.5 million.  Chairman Brandon Boze, an appointee of ValueAct sold $331 million himself reducing his holdings by 33.6%

ETN Eaton was upgraded to Overweight from Sector Weight at KeyBanc with analyst Jeffrey Hammond saying he believes the stock has traded at an “unwarranted discount” to peers.  Apparently, no one told that to the five insiders sold $9.5M in a combination of stock sales and option exercises.

SSTI ShotSpotter Seven insiders unloaded  $3.5M mostly through a spot secondary underwritten by JMP Securities. ShotSpotter, Inc. provides software-as-a-service based gunshot detection solutions for law enforcement officials and security personnel in the United States, South Africa, and internationally. The company’s solutions include ShotSpotter Flex, an outdoor public safety solution for cities and municipalities to identify, locate, and deter gun violence by incorporating a real-time gunshot detection system into their policing systems; and SST SecureCampus that helps the law enforcement and security personnel.

COO Cooper Companies Six insiders sold $7.4 million in a combination of stock and options taking advantage of positive price action from favorably reviewed 4th quarter earnings. Healthcare has been a strong performer lately.

The Cooper Companies, Inc. operates as a medical device company worldwide. It operates through CooperVision and CooperSurgical business units. The company develops, manufactures, and markets a range of contact lenses, including spherical lenses, and toric and multifocal lenses that correct near- and farsightedness, as well as addresses various complex visual defects, such as astigmatism and presbyopia. It also provides range of products and services focusing on women, babies, and families, including medical devices, fertility, genomics, and diagnostics and contraception for hospitals and surgical centers, obstetricians’ and gynecologists’ (ob/gyns) medical offices, and fertility clinics.

COST Costco Wholesale 5 insiders sold $7.4 million of Costco after earnings. This was the most selling in six months as Costco flirts with all-time highs.

In this report, we examined open market purchases from employees and directors.  Insiders sell stock for many reasons, but they generally buy for just one – to make money.  As a standard, we only look at material amounts of money, $200 thousand or more, as anything less could just be window dressing. The bar is different from selling because the natural state of management is to be sellers. This is because most companies provide significant amounts of management compensation packages as stock. Therefore, with selling, we analyze for unusual patterns, such as insiders selling 25 percent or more of their holdings or multiple insiders selling near 52-week lows. Another red flag is large planned sale programs that start without warning. We generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and not the SMART money we are trying to go to school on.  Although this info is available for free from the SEC’s Web site, Edgar, we subscribe to the Washington Service as they provide a way to manage and make sense of the vast realms of data.

To learn more about our strategy, visit our website here. We welcome your comments on our analysis. We may own positions, long or short, in any of these names and are under no obligation to disclose that.