Insider Weekends: Tech Management Keeps Selling (NASDAQ:Z)

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In a week where we saw most stock indices rebound strongly, insiders reduced their buying after three weeks of high buying. Purchases fell 64% in absolute dollars and 26% in terms of number of companies which saw insider buying. I followed a select group of tech growth companies to see when insiders at those companies might stop selling and start buying instead. Despite the huge declines in their stock, insiders continue to sell. This doesn’t give me much confidence that the rally we saw last week marked the end of the bear market, but looks more like a bear market rally from temporarily oversold conditions. Obviously, there’s no way to know for sure and we’ll see if that’s indeed the case in the coming months. I was looking in Zillow (NASDAQ:Z) recently and I was surprised at how many members of the management team continued to sell the shares and in many cases below their recent strike prices because I tweeted friday (changes made):

With Zillow back to the levels TCV independent director Jay Hoag was buying in May 2019, I was curious to see if he, founder/CEO Rich Barton, or any other insider was buying stock. As we’ve seen with other growth companies, buying has been sparse despite the stock’s 80% drop. Instead of buying shares, insiders including the CFO, COO, CTO, GM, CRO, and President are all selling and they’re selling at lower prices. to their last option exercises.

I’ve been long on the stock for years but resisted the urge to add until I saw the company stabilize, management started buying and I saw Jay Hoag or Rich Barton buy on the open market. With housing easing, their house flipping business in run-off mode, average monthly visits down 5% YoY in Q1 2022, and slowing growth in its IMT (Internet, Media and technology), the business will remain difficult for some time.

I wrote the following about Zillow leaving its home-based flipping business last November in an article titled What does the release of iBuying’s Zillow mean for Opendoor?

Zillow was using their iBuying business to create an operating system for buying and selling homes, which they called Zillow 360. They got into value-added services like mortgage originations and I wouldn’t have been surprised if they turned to things like title insurance. Opendoor already does some of this through Opendoor Home Loans, but if the company hopes to succeed, it will need to do much more than just buy and sell homes.

Zillow remains committed to a grand vision of creating the “super housing app” that will bring value to home buyers and sellers at different points in their journey. They want to go from a big slice of the $19 billion real estate marketing pie to a much bigger slice of the $300 billion real estate transaction, rental and mortgage fees pie. Until the company begins to make meaningful progress towards realizing this grand vision, the stock will likely remain under pressure as the company works on overhanging its house-flipping error.

Zillow Super App Vision

Zillow Investor Presentation

Welcome to issue 621 of Insider Weekends. Insider buying declined last week, with insiders buying $115.85 million in shares from $324.11 million the previous week. Sales also fell to $944.38 million from $1.08 billion the previous week. We also saw insider buying by the CEOs of SoFi Technologies (SOFI), Uber (UBER) and PayPal (PYPL). Several funds and institutions that were involved in some of these growth companies before their IPOs have also bought shares in recent months, including venture capital firm Sequoia buying shares of DoorDash (DASH) in March, the Indian fund of Sequoia buying shares of Freshworks (FRSH) in March. and Singapore’s sovereign wealth fund buying shares of Affirm (AFRM) in April.

Sale/purchase ratio:

The insider sell/buy ratio is calculated by dividing the total insider sells in a given week by the total insider buys that week. Last week’s adjusted ratio rose to 8.15. In other words, insiders sold more than 8 times as many shares as they bought. The sell/buy ratio this week was unfavorable compared to the previous week when the ratio stood at 3.33.

Notable Insider Buys:

1. Avis Budget Group, Inc. (CAR): $200.98

Executive Chairman Bernardo Hees acquired 28,334 shares of this car and truck rental company, paying $172.78 per share for a total consideration of $4.89 million. These shares were purchased indirectly through a trust.

PER: 6.31 Front P/E: 9.53 Industry P/E: 42.26
P/S: 0.94 Price/Book: N/A EV/EBITDA: 12.18
Market cap: $9.7 billion Avg. Daily volume: 1,054,339 52 week range: $65.87 – $545.11

2. The Beachbody Company, Inc. (BODY): $2.16

The shares of this health and wellness platform were acquired by 2 insiders:

  • Chairman and CEO Carl Daikeler acquired 1,789,200 shares, paying $1.75 per share for a total consideration of $3.13 million. Mr. Daikeler increased his stake by 367.63% to 2,275,879 shares with this purchase.
  • Administrator Michael Heller acquired 224,423 shares, paying $1.32 per share for a total amount of $297,093. Mr. Heller increased his stake by 5.43% to 4,357,866 shares with this purchase.

PER: N/A Forward P/E: -7.45 Industry P/E: N/A
P/S: 0.79 Price/Booking: 2.11 EV/EBITDA: -4.02
Market cap: $671.24 million Avg. Daily volume: 1,191,814 52 week range: $0.91 – $13.5

3. Newmark Group, Inc. (NMRK): $11.29

Chairman Howard W. Lutnick acquired 277,000 shares of this commercial real estate services company, paying $10.83 per share for a total consideration of $2.99 ​​million. These shares were purchased indirectly through a trust.

PER: 3.09 Front P/E: 5.76 Industry P/E: N/A
P/S: 0.84 Price/Book: 1.7 EV/EBITDA: 19.19
Market cap: $2.58 billion Avg. Daily volume: 1,610,601 52 week range: $10.14 – $19.1

4. Coinbase Global, Inc. (COIN): $75.32

Director Frederick Ernest Ehrsam III acquired 30,030 shares of this crypto-focused brokerage, paying $60.60 per share for a total consideration of $1.82 million. These shares were purchased indirectly through a trust.

PER: 7.7 Forward P/E: -18.37 Industry PER: 13.38
P/S: 2.74 Price/Book: 2.57 EV/EBITDA: 4.42
Market cap: $19.73 billion Avg. Daily volume: 9,122,877 52 week range: $40.83 – $368.9

5. BitNile Holdings, Inc. (NILE): $0.36

Executive Chairman Milton C. Ault III acquired 5,042,500 shares of this bitcoin mining company, paying $0.31 per share for a total consideration of $1.55 million. 5,000,000 of these shares were purchased indirectly by Ault Alpha LP.

PER: N/A Forward P/E: -2.13 Industry P/E: 26.18
P/S: 1.57 Price/pound: 0.26 EV/EBITDA: -18.62
Market Cap: $113.15M Avg. Daily volume: 37,055,626 52 week range: $0.23 – $3.7

You can view the full list of buys from this insider buying page.

Notable insider sales:

1. Arista Networks, Inc. (ANET): $105.87

Shares of this networking company were sold by 3 insiders:

  • Development director Andreas Bechtolsheim sold 403,000 shares for $101.12, generating $40.75 million from the sale. These shares were sold indirectly through a trust. 3,000 of these shares were sold following the exercise of options immediately before the sale.
  • Platform director John F. McCool sold 7,621 shares for $97.93, generating $746,330 from the sale. These shares were sold indirectly through a trust.
  • Director Kelly Bodnar Battles sold 560 shares for $98.50, generating $55,159 from the sale.

PER: 36.38 Front P/E: 24.85 Industry PER: 20.42
P/S: 10.3 Price/Book: 7.86 EV/EBITDA: 27.31
Market cap: $32.53 billion Avg. Daily volume: 1,956,115 52 week range: $82.94 – $148.57

2. Loews Corporation (L): $65.93

The shares of this diversified holding were sold by 2 insiders:

  • Director Andrew H. Tisch sold 500,000 shares for $64.15, generating $32.08 million from the sale. These shares were sold indirectly by trusts.
  • Senior Vice President and Chief Investment Officer Richard Waldo Scott sold 6,123 shares for $64.35, generating $394,015 from the sale. These shares were sold following the exercise of options immediately prior to the sale.

PER: 10.16 Front P/E: 22.73 Industry P/E: 11.01
P/S: 1.12 Price/pound: 0.98 EV/EBITDA: 6.73
Market cap: $16.23 billion Avg. Daily volume: 948,098 52 week range: $51.35 – $68.2

3. Chubb Limited (CB): $210.89

The shares of this insurance company were sold by 2 insiders:

  • Chairman and CEO Evan G. Greenberg sold 62,410 shares for $208.44, generating $13.01 million from the sale. 14,400 of these shares were sold indirectly through various trusts.
  • Director Michael G. Atieh sold 500 shares for $203.49, generating $101,745 from the sale.

PER: 11.23 Front P/E: 12.49 Industry P/E: 11.01
P/S: 2.2 Price/Book: 1.58 EV/EBITDA: 13.04
Market cap: $89.36 billion Avg. Daily volume: 1,753,169 52 week range: $155.78 – $218.99

4. Royalty Pharma plc (RPRX): $41.27

The shares of this biotechnology company were sold by 3 insiders:

  • Director Rory B. Riggs sold 150,000 shares for $39.42, generating $5.91 million from the sale.
  • EVP, Investments & GC George W. Lloyd sold 100,000 shares for $40.27, generating $4.03 million from the sale.
  • Executive Vice President and Chief Scientific Officer James F. Reddoch sold 75,000 shares for $40.44, generating $3.03 million from the sale. These shares were sold indirectly by Reddoch RPI LLC.

PER: 30.15 Front P/E: 12.21 Industry P/E: 24.25
P/S: 12:27 p.m. Price/Booking: 3.11 EV/EBITDA: 18.38
Market cap: $27.96 billion Avg. Daily volume: 2,120,115 52 week range: $34.86 – $47.1

5. Matterport, Inc. (MTTR): $5.67

Director Jason Krikorian sold 2,206,146 shares of this spatial data company for $5.32, generating $11.73 million from the sale. These shares were sold indirectly by DCM VI, LP Jason Krikorian.

PER: N/A Forward P/E: -15.32 Industry P/E: 49.27
P/S: 2:18 p.m. Price/Book: 2.42 EV/EBITDA: -4.87
Market cap: $1.6 billion Avg. Daily volume: 7,321,207 52 week range: $3.94 – $37.6

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

About Chris McCarter

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