As shares of medical device-maker NuVasive (NASDAQ:NUVA) soared towards a recent 52-week high of $51.25, sales by company insiders likewise ran amok. But one inside shareholder in particular isn’t joining in the selling.
Instead, NuVasive’s CEO is buying.
According to Form 4 filings with the SEC, NuVasive insiders have placed a total of 14 sell orders over the past three months, against only six buys. In total, these insiders have sold 167,873 more shares than they have bought. Helping to offset all the selling, however, have been a series of “indirect” and “automatic” purchase orders by company Chairman and CEO Mr. Gregory T. Lucier.
Lucier’s buying spree began with a 34,000 indirect acquisition of NuVasive shares on May 28, 2015, which more than doubled his stake in the company. Subsequent acquisitions of 3,000 shares on June 1, then 5,000 share batches acquired respectively on June 2, 3, and 4, grew Lucier’s stake to its last-reported level of 80,000 shares. Each of these last four purchases, placed as prices slid from $50.25 down to $49.67, were characterized as “automatic” buys.
What does it mean to you?
NuVasive shares have continued to slide since Lucier’s purchases ceased, closing Monday at $49 (a price that still leaves NuVasive shares up 42% over the past year, against just a 7% rise for the S&P 500). At this price, NuVasive shares sell for more than 71 times earnings and 3 times sales.
If those valuations seem high, it’s because they are. NuVasive, which pays no dividend, and is pegged for only 15% long-term earnings growth by analysts who follow it. That works out to a PEG ratio on the stock of roughly 4.7 (hint: value investors generally try to buy shares that sell for a price-to-earnings-to-growth ratio of 1.0 or less).
Little wonder, then, that analysts at Goldman Sachs removed their “buy” rating on the stock last week. Little wonder that most insiders are selling. In fact, the only remarkable thing here, really, is that NuVasive’s CEO continues to sink his own money into the stock — but then again, seeing as his purchases are “automatic,” maybe he really has no say in the matter.
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