Cluster Of Insiders Purchase Carvana, An E-commerce Platform For Buying And Selling Used Cars - Big Insider Trades
A nearly 6% drop in the S&P 500 index last week spurred insider buying with insiders purchasing more than 4 times as much stock as they did the prior week, reversing three weeks of declining purchases. While we did not reach the levels of insider buying we saw in
With companies like Amazon (AMZN) down 39% over the last year, some of the bubble stocks have suffered even worse fates. One of these companies, Carvana (CVNA), was down nearly 95% peak-to-trough earlier last week from a peak of
Carvana 1 Year Price Chart With Insider Purchases (InsideArbitrage.com)
Among the survivors of this rubble will be generational buying opportunities. I wrote in early May that the market action at that time did not seem to indicate capitulation and my opinion has not changed. There were several things wrong at Carvana and we wrote the following about insider purchases at the company at the end of April,
In a month where we experienced the worst monthly drop in the Nasdaq since 2008 and where the big tech companies that were holding up the indexes also dropped, insiders stepped up as we expected to buy a significant amount of stock last week. Insiders purchased 11 times more stock last week than they purchased in the week prior. The
$463 million of purchases were also significantly above the$6 million of purchases we saw during the same week inApril 2021 and$15 million of purchases during the last week ofApril 2020 .The number is unusually high last week because the father-son duo
Ernest Garcia II andErnest Garcia III purchased shares of online car dealer Carvana (CVNA) in a secondary offering. They collectively purchased$364 million in a secondary offering but their purchases pale in comparison to the elder Garcia's$1.15 billion of sales of Carvana in 2020 and$2.25 billion of sales in 2021 as you can see here. The stock has been under pressure lately as it launched a$1.25 billion secondary offering to sell class A shares and Apollo Global stepped in to pick up half of the$3.275 billion in debt it was trying to sell at a high yield of 10.25%. Carvana needed the capital to fund its$2.2 billion acquisition of KAR Global's auction business. The stock is down more than 80% from a peak of over$370 last August.
This cluster of purchases last week was a little more encouraging and the company has taken some steps that might help it survive. Beyond layoffs and executives agreeing to forego salaries for the rest of this year, Carvana also appears to have stopped overpaying for used cars. I priced one of my cars to see what kind of money Carvana would pony up with and got an offer that was nearly half the Kelly Blue Book trade-in value for the vehicle. Carvana continues posting GAAP net losses and remains cash flow negative. However there are several other companies with positive free cash flows and strong balance sheets that are now trading at interesting valuations, if not at downright attractive levels.
Insider buying increased significantly last week with insiders purchasing
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 1.78. In other words, insiders sold almost 2 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 19.74.
Notable Insider Buys:
1. Carvana Co. NYSE:CVNA: $24.27
Shares of this e-commerce platform for buying and selling used cars were acquired by 4 insiders:
- 10% Owner Ernest C. Garcia acquired 1,985,258 shares, paying
$21.18 per share for a total amount of$42.05 million . These shares were purchased indirectly by Verde Investments, Inc. - Chief Product Officer
Daniel J. Gill acquired 94,000 shares, paying$21.77 per share for a total amount of$2.05 million . Mr. Gill increased his stake by 253.90% to 131,023 shares with this purchase. - Chief Brand Officer
Ryan S. Keeton acquired 32,000 shares, paying$23.06 per share for a total amount of$737,840 . Mr. Keeton increased his stake by 43.09% to 106,269 shares with this purchase. - Vice President, General Counsel, & Secretary
Paul W. Breaux acquired 10,000 shares, paying$21.85 per share for a total amount of$218,500 . Mr. Breaux increased his stake by 10.74% to 103,149 shares with this purchase.
P/E: N/A Forward P/E: -7.75 Industry P/E: 13.72 P/S: 0.31 Price/Book: 27.33 EV/EBITDA: -26.52 Market Cap:
2. Procore Technologies, Inc. NYSE:PCOR: $45.76
Director
P/E: N/A Forward P/E: -77.56 Industry P/E: 44.75 P/S: 11.07 Price/Book: 5.32 EV/EBITDA: -18.08 Market Cap:
3. Chewy, Inc. NYSE:CHWY: $28.7
Director
P/E: N/A Forward P/E: -287 Industry P/E: 42.84 P/S: 1.31 Price/Book: 206.48 EV/EBITDA: -248.93 Market Cap:
4. Avis Budget Group, Inc. NASDAQ:CAR: $160.83
Executive Chairman
P/E: 5.05 Forward P/E: 7.54 Industry P/E: 38.37 P/S: 0.75 Price/Book: N/A EV/EBITDA: 7.87 Market Cap:
5. Lions Gate Entertainment Corp. NYSE: LGF-B: $8.92
Director
P/E: N/A Forward P/E: 12.25 Industry P/E: 53.32 P/S: 0.56 Price/Book: 0.76 EV/EBITDA: 3.16 Market Cap:
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. NVIDIA Corporation NASDAQ:NVDA: $158.8
Director
P/E: 42.59 Forward P/E: 24.62 Industry P/E: 18.30 P/S: 13.4 Price/Book: 15.11 EV/EBITDA: 31 Market Cap:
2. Airbnb, Inc. NASDAQ:ABNB: $99.49
Chairman of Airbnb.org
P/E: 77.54 Forward P/E: 39.96 Industry P/E: 200.55 P/S: 9.71 Price/Book: 13.37 EV/EBITDA: 61.43 Market Cap:
3. Quanta Services, Inc. NYSE:PWR: $113.85
President and CEO
P/E: 34.67 Forward P/E: 16.29 Industry P/E: 30.02 P/S: 1.15 Price/Book: 3.19 EV/EBITDA: 17.49 Market Cap:
4. Morningstar, Inc. NASDAQ:MORN: $228.4
Executive Chairman
P/E: 53.87 Forward P/E: 27.32 Industry P/E: 11.69 P/S: 5.53 Price/Book: 7.23 EV/EBITDA: 27.61 Market Cap:
5. Cadence Design Systems, Inc. NASDAQ:CDNS: $143.09
President and CEO
P/E: 53.41 Forward P/E: 32.3 Industry P/E: 44.75 P/S: 12.51 Price/Book: 14.3 EV/EBITDA: 38.63 Market Cap:
You can view the full list of sales from this Insider Sales page.