As it has been for a long time now, selling is swamping buying. We tend to overlook activity by 10% or more holders and nominee directors as they are often playing with other people’s money and instead concentrate on C level officers and directors.
Buying
Tiffany Director Trapani added to his holdings of TIF with a purchase of 150,000 shares at $89.37 worth $13.4 miilion. I wrote last week that I thought Tiffany was overvalued but who am I to offer such an opinion when this former founder CEO of Bulgaria managed to make so much money selling the company to LVMH? I wish I had bought some stock now as its gone up since I wrote about it last week.
Builders First Source Chairman Levy bought 800,000 shares of BLDR at $16.17 to the tune of $12.9 million. AT the same time the on September 6, 2017, affiliates of JLL Partners, Inc. (“JLL”) owned approximately 12.73% of our outstanding common stock. Fifteen business days after completion of this offering, JLL will distribute 862,407 shares to its general partner and certain of its limited partners. Paul S. Levy, Chairman of our board of directors and a Senior Managing Director of affiliates of JLL, is purchasing approximately 800,000 shares in the offering at the price paid by the underwriters. As a result of such purchase and the shares he will receive in the distribution from JLL, he will own approximately one million shares after the completion of this offering.This is very interesting as purchases near a 52 week high are the most bullish of all insider purchases. This one merits more analysis as a large holder just exited their entire position worth over $200 million yet he bought nearly 800 thousand shares and now owns one million. This fails to pass the smell test and is the kind of conflicted related party dealing that reminds me of Goldman’s Sachs escapades with Aubrey Mcllelan(now deceased of Chesapeake energy fame. ) I’d avoid this. As a rule private equity hobbles a company with massive debts loads and I avoid those investments like the plague.
Coty Yes, more insider buying at COTY. This is really incredible as two insiders added significantly to their holdings of this poor performing company. We have written about this before but apparently Officer McMullen who bought $1 million worth at $16.50 increasing his holdings by 62.5% and Director Singer increasing his by 44.4% purchasing $656.2 thousand dollars worth are not reading this blog. I may try to talk to these guys next week as neither I nor the many analysts covering this stock can see the promising future. The only logical explanation is that they thing that JAB holdings or someone else is going to take this dog out whole.
American Assets Trust, Inc Chairman and major holder added another $1.9 million to his holdings at ATT. He’s been a steady buyer of this steady Eddie REIT.
US Steel CFO Bradley added $1 million to his holding at X at recent high price of $27.23. Generally officers at large publicly traded companies are required to own a percentage of their annual salary in the company stock but they always have discretion about price and timing. This is a large buy from our favorite class of insider, the chief financial officer. We bought a little in the after market Friday.
Genesco Two insiders bought into this beleaguered specialty retailer of branded footwear, licensed and branded headwear and licensed sports apparel and accessories. Together the CFO and Chairman bought about $840 thousand dollars worth of GCO at around $24. We will probably take a stab at this one as many retailers have been very sold and have had good bounces. We won’t stay around for long as retail stores are in secular decline and I don’t yet see a good multi channel strategy. At an 8 P.E. multiple you might not need one.
Unloading
Walmart Director family member Walton takes advantage of recent share price gains to unload a whopping $502 million of stock in an unplanned sale. I think this is notable as the stock is up 49.5% in a year. With Amazon going into the grocery business, this is sure to drive down margins and recent Wall Street euphoria over Walmart might be misplaced. Granted the stock is not overpriced on a DCF model but I think multiples are coming down across the board as Amazon tears down profit margins for all realtors competing with it. We have a small recent short position in WMT.
Stamps.com Savy investor Director Loyd Miller III unloads stock options with 5.6 years left at lifetime high prices for this short sale favorite. I’d short STMP on any bounce with a tight stop down 10%.
Laboratory Corp of American Chairman King sells $27.9 million worth of stock options with 5.6 years left to run. Why would anyone sell options so early if they have real confidence in the business. Either they can print all they want or think it’s a near term top. Either way its enough to shake investor confidence a bit in LH. Earnings were down last quarter on increased revenues but cash flow was up.
VF Corp Chairman Wiseman sells $63.29 million of options 3.5 years early. VFC has been on a great run. Why not short VFC and buy beat up GCO? That’s our read and will research this one more. Stay tuned to our blog. If we are long it we will tell you and if we are short we will share it with you as well but we only feel compelled to do this on future blog posts. We don’t tout, we just do it.
Nvidia Corp. CEO Huang takes advantage of sky-high stock price to unload $16.3 million at $166.08. We are short NVDA although suspect we could be a little early. Everyones knows NVDA is on a roll but no large cap semi company trades at at 48 P.E. multiple. NVDA has got a lot going for it, 50% revenue growth rates due to its chips being used by Tesla, Bitcoin miners, and hot gaming markets. I just find it hard to stay with a stock when Intel just bought Mobile Eye and Qualcomm is buying NXPI. Both are world-class deep pocket competitors who are targeting the rapidly evolving auto markets and server markets. We are short NVDA recently. Cramer loves the stock and proudly boasts he named his dog Nvidia. No disrespect Jim, but you have to agree that does sound like a classic top of the market move.
MGM Resorts International Chairman Murren unloads $1o million worth of stock representing 25.7% of his holdings. This is not exactly a vote of confidence. Las Vegas wins were down a bit in the latest Nevada reports but Macau was up an incredulous 22%. I noted Stevie Wynn was selling stock at Wynn and he’s an excellent timer. Maybe this is as good as it gets for now. We are looking more into shorting MGM but don’t see a compelling reason. Last quarters earnings were down on increased revenues but cash flow soared nearly 50%
Flir Systems COO Surran unloads 55.1% of his holdings with an option sale with years left on them. This is most likely explained by the fact that he got canned on August 30th or at least that’s my take when they say someone resigned. If its another job opportunity it reads he left to pursue other opportunities. The consumer security business if falling off a cliff but other businesses seem fine. Usually something is wrong when you can the COO, but with defense spending on the rise, is this the time to short?