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posted on 28 August 2016

Insider Trading 26 August 2016: Icahn Buying More Herbalife

by Asif Suria

Welcome to edition 323 of Insider Weekends. Insider buying increased last week with insiders buying $183.37 million of stock compared to $177.89 million in the week prior. Selling decreased with insiders selling $1.66 billion of stock last week compared to $3.01 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 decreased to 9.07. In other words, insiders sold more than 9 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 16.94. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Insider Sell Buy Ratio August 26, 2016

Insider Sell Buy Ratio August 26, 2016

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. Herbalife Ltd. (HLF): $60.5

10% Owner Carl C. Icahn acquired 2,304,683 shares of this nutrition company, paying $59.31 per share for a total amount of $136.69 million. These shares were purchased indirectly through a fund.

We don't often comment on purchases by 10% owners but this one was much too interesting to ignore and was another volley in the long-standing battle between Bill Ackman on the short side and Carl Icahn on the long side. Herbalife's stock opened weak on Friday and at one point during the day was down almost 7.8% on news that Carl Icahn was considering selling his large stake in the company and that Bill Ackman had been approached to buy a large block of stock. As the day progressed, the stock recovered some of those losses. After the market closed, Mr. Icahn filed a form 4 indicating he had actually purchased an additional 2.3 million shares and released this statement.

It has been over two years since we wrote the following about the company after a trio of insider purchases at Herbalife.

"Herbalife is currently caught in the cross-fire between longs and passionate short-sellers like Bill Ackman who claim the stock is headed to zero and believe the company is a criminal enterprise. Following Ackman's latest three hour presentation on the company, the stock shot up more than 25% only to give back all of those gains and then some after the company reported weak second quarter results last week."

A series of tweets between an investor who is well know for his wit and an Australian hedge fund manager who is long Herbalife provides some additional color (warning: a lot of profanity in this tweet exchange).

You can view the list of recent insider transactions for Herbalife Ltd. here.

P/E: 20.73Forward P/E: 11.04Industry P/E: 31.27
P/S: 1.27Price/Book: 162.12EV/EBITDA: 11.1
Market Cap: $5.62BAvg. Daily Volume: 2,096,51052 Week Range: $42.26 - $72.22

2. Penske Automotive Group, Inc. (PAG): $44.35

Chairman & CEO Roger S. Penske acquired 300,000 shares of this auto dealer, paying $42.55 per share for a total amount of $12.77 million. These shares were purchased indirectly by Penske Automotive Holdings Corp.

Mr. Penske is showing a lot of consistency in his purchases of Penske as this is the fourth week in a row his purchases have made our list.

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

P/E: 11.85Forward P/E: 10.51Industry P/E: 11.75
P/S: 0.19Price/Book: 2.22EV/EBITDA: 12.58
Market Cap: $3.78BAvg. Daily Volume: 845,67052 Week Range: $29.29 - $53.28

3. WisdomTree Investments, Inc. (WETF): $9.91

Chief Executive Officer Jonathan L. Steinberg acquired 250,000 shares of this asset management company, paying $10.16 per share for a total amount of $2.54 million. Mr. Steinberg increased his stake by 3.50% to 7,384,001 shares with this purchase.

This purchase caught my eye as I used to follow WisdomTree several years ago when it was still an OTC Bulletin Board stock. The stock eventually listed on Nasdaq and went on to increase its assets under management (AUM) to nearly $60 billion. The stock appreciated and peaked over $26 last August.

The company is considered an ETF pure play because it has over 100 ETFs and is not bogged down by a large portfolio of mutual funds that has put a damper on traditional asset management companies like Janus Capital (JNS) and Franklin Resources (BEN). This has led many investors to believe that the company would be eventually acquired and hence it often tends to trade at a premium to other asset management companies.

One of the reasons WisdomTree saw its assets under management climb to $60 billion was the popularity of its currency hedged ETFs that gave investors exposure to Europe and Japan. As the popularity of these ETFs has waned over the last year, WisdomTree has seen its AUM decline and the company now has $38.34 billion in AUM. The stock decline reflects this large drop in AUM.

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

P/E: 22.99Forward P/E: 34.17Industry P/E: 17.16
P/S: 4.83Price/Book: 6.37EV/EBITDA: 9.78
Market Cap: $1.33BAvg. Daily Volume: 2,613,67052 Week Range: $8.7 - $22.33

4. Western Refining, Inc. (WNR): $24.03

Chief Executive Officer Jeff A. Stevens acquired 100,000 shares of this oil and gas pipelines company, paying $23.25 per share for a total amount of $2.32 million. Mr. Stevens increased his stake by 2.89% to 3,556,456 shares with this purchase.

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

P/E: 8.54Forward P/E: 14.14Industry P/E: 12.03
P/S: 0.31Price/Book: 1.51EV/EBITDA: 5.52
Market Cap: $2.61BAvg. Daily Volume: 3,479,13052 Week Range: $18.14 - $47.55

5. Chesapeake Energy Corporation (CHK): $6.4

Director Archie W. Dunham acquired 350,000 shares of this oil and natural gas producer, paying $6.07 per share for a total amount of $2.13 million. Mr. Dunham increased his stake by 12.60% to 3,127,951 shares with this purchase.

You can view the list of recent insider transactions for Chesapeake Energy Corporation here.

P/E: N/AForward P/E: 7.71Industry P/E: 15.83
P/S: 0.5Price/Book: N/AEV/EBITDA: 19.15
Market Cap: $4.91BAvg. Daily Volume: 41,028,20052 Week Range: $1.5 - $9.55

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $124.96

Shares of Facebook were sold by 2 insiders:

  • Director Jan Koum sold 1,160,914 shares for $124.34, generating $144.35 million from the sale. These shares were sold indirectly through a trust.

  • VP and General Counsel Colin Stretch sold 10,350 shares for $125.00, generating $1.29 million from the sale.

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

P/E: 59.73Forward P/E: 24.79Industry P/E: 28.79
P/S: 16.05Price/Book: 7.04EV/EBITDA: 30.3
Market Cap: $358.84BAvg. Daily Volume: 19,932,70052 Week Range: $85.72 - $128.33

2. Viacom, Inc. (VIA): $45.92

Director Philippe P. Dauman sold 680,098 shares of this media and entertainment company for $41.76, generating $28.39 million from the sale.

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

P/E: 8.84Forward P/E: N/AIndustry P/E: N/A
P/S: 1.41Price/Book: 4.49EV/EBITDA: 8.76
Market Cap: $18.21BAvg. Daily Volume: 69,24152 Week Range: $33.88 - $54.69

3. Juniper Networks, Inc. (JNPR): $23.28

Director Scott Kriens sold 750,000 shares of this network infrastructure company for $23.46, generating $17.59 million from the sale. These shares were sold indirectly through a trust.

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

P/E: 14.47Forward P/E: 10.78Industry P/E: 19.85
P/S: 1.83Price/Book: 1.92EV/EBITDA: 8.16
Market Cap: $8.92BAvg. Daily Volume: 3,130,63052 Week Range: $21.18 - $32.39

4. Nevro Corp. (NVRO): $96.4

Shares of this medical device company were sold by 3 insiders:

  • Director Wilfred E. Jaeger sold 154,840 shares for $97.79, generating $15.14 million from the sale. These shares were sold indirectly by Three Arch Partners IV, L.P.

  • Director Michael F. Demane sold 13,334 shares for $99.00, generating $1.32 million from the sale. 6,668 of these shares were sold indirectly through various trusts.

  • VP, Quality Doug Alleavitch sold 3,000 shares for $100.00, generating $300,000 from the sale. 2,000 of these shares were sold indirectly by Mr. Doug's spouse.

You can view the list of recent insider transactions for Nevro Corp. here.

P/E: N/AForward P/E: N/AIndustry P/E: N/A
P/S: 18.48Price/Book: 10.91EV/EBITDA: -58.19
Market Cap: $2.75BAvg. Daily Volume: 556,07252 Week Range: $36.51 - $100.33

5. Evercore Partners Inc. (EVR): $51.61

Shares of this investment banking and asset management company were sold by 2 insiders:

  • President and CEO Ralph Schlosstein sold 195,212 shares for $51.19, generating $9.99 million from the sale.

  • CEO EVR Partners International Andrew Sibbald sold 125,000 shares for $51.21, generating $6.4 million from the sale.

You can view the list of recent insider transactions for Evercore Partners Inc. here.

P/E: 40.26Forward P/E: 12.9Industry P/E: 17.16
P/S: 1.5Price/Book: 4.88EV/EBITDA: N/A
Market Cap: $2.00BAvg. Daily Volume: 432,32752 Week Range: $40.35 - $60.63

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


Disclaimer: I do not have any positions in any of the stocks mentioned in this article. 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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria


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