Buying
American Homes for Rent AMH Chairman of the Board, Hugh Wayne, bought a monstrous $30 million worth of this REIT increasing his holdings by 12.9%. I have watched Mr. Wayne purchase stock for sometime in this low yielding REIT and have been curious as to the end game. It was established in 2012 by Public Storage founder Wayne Hughes after scooping up thousands of foreclosed homes. I believe the plan is simple, profiting from once in a life time housing meltdown, lack of affordable housing, raising rents, and then ultimately selling the homes at greater prices. Undoubtedly it will work for Mr. Wayne but it hasn’t been much of a winner to date. FYI the Company has a horrible reputation on social media from its tenants.
Carizzo Oil and Gas CRZO Hope springs eternal in the oil patch. Chairman of the Board Steven Webster adds to his underwater CRZO with $3.8 million worth of stock at $12.74. Mr. Webster last purchased stock in March at $30.14 per share.
Spark Energy SPKE Chairman of the Board Maxwell buys $1.5 million worth at $15.45. Spark is an independent retail energy services company first founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. They purchase their natural gas and electricity supply from a variety of wholesale providers and bill customers monthly for the delivery of natural gas and electricity based on their consumption at either a fixed or variable price. We are trading this stock not investing in it. Kinda sounds like Enron to me and its based in Houston too.
Inovalon INOV Chairman buys $1.0 million worth of stock at $16.38 after an impressive run. Inovalon is one of the companies that collect vast realms of medical data, dice it, slice it, parse it, and then figure out ways to sell it to the myriads of companies in the health industry, the largest sector of the economy. Short interest is nearly 15%. Tread carefully around this name with its spotty history of revenue and earnings growth.
Cheniere Energy LNG CEO Fuoco adds to his holdings with $1 million purchase at $42.32. LNG’s first mover advantage has rapidsly disappeared as many competing CAPEX projects by major integrated oils are coming on the market, driving down the margins on future contracts for LNG. I’m not excited about the advantages Cheniere has unless there is a prolonged disruption of Russian supply of gas to Europe.
Forterra FRTA Eleven different insiders purchased stock this last week, although the numbers were small. Only three buys were greater than $100k, the largest of which was $251.9k at $4.03. This is an interesting play on the country’s decaying municipal water infrastructure. Monster short interest of 30% could cause a serious spike in price if there is some movement on infrastructure spending in the Government’s budget. The American Water Works Association, or AWWA, estimates that nearly $1 trillion will need to be spent from 2010 to 2035 to repair and upgrade aging water infrastructure in the United States. Forterra is a carved out company with limited operating history created by private equity from the building products business of HeidelbergCement AG . The Company’s most recent 10K identified a material weakness in internal controls and substantial indebtedness. We are long a small amount at $4.16 per share. After the close, Friday, more insider purchases were reported on Form 4s filed with the SEC.
Selling
GoDaddy GDDY Several insiders took advantage of high stock prices to unload $20 million shares of stock in a spot secondary worth $878 million worth of web hosting company GoDaddy. That’s about 15% of the outstanding stock, a stunning amount of stock to unload and the Company received none of the proceeds. Secondaries like this will drive down the price of a stock but generally soak up all selling demand and if the fundamentals are good, often prove opportune times to buy. Not in the case of low quality hosting company GoDaddy. There is a lot more stock left to come. Wait for a bounce and pounce on the short side.
Tiffany TIF This is an interesting sale by long term investor Qatar Investment Authority. The sovereign wealth fund took advantage of recent price gains to unload 27.1% of their holdings at $94.16 per share. It was a well executed trade because the stock dropped $5 on the news. We took advantage of the drop to pick up some shares on the long side as just last week we wrote about it under the buying side.
Box Inc Box has done an admirable job of reinventing itself as a content management partner as storage is basically a commodity business. None the less that didn’t stop VP McGoff from unloading 28% of his holdings after 2nd quarter earnings. Box claims to obtain cash flow positive this year. Like almost all cloud companies, valuation makes no sense but that doesn’t mean its time to short.
AVIS CAR has been on an extraordinary run since Alphabet announced in June a partnership to manage a fleet of experimanetal autonomous vehicles its Waymo unit was testing. Concept hungry investors and momentum crazed day traders have been buying into the idea that Avis and Hertz will reinvent themselves as the stewards of the new gig economy. Chairman of the Board Nelson is not buying into the dribble of day traders. He took advantage of this new cache to dump 22% off his shares for $5.6 million this week. Old line companies don’t have a successful track record of reinventing themselves, especially when there are already established disrupters like Uber and Lyft. Just today it was rumored that Google was investing $1 billion in Lyft. as ride sharing companies like Uber and Lyft are disrupting car rental companies and bankrupting taxis. We have a high conviction short with CAR.