We generally ignore 10% shareholders as they tend to be OPM (other people’s money) and not the SMART money we are trying to go to school on. Although this info is available for free from the SEC’s Web site Edgar, we subscribe to the Washington Service as they provide a way to manage and make sense from the realms of data. To learn more about our strategy visit our website at The Insiders Fund. We welcome your comments on our analysis.
Buying
Acasia Research ACTG invests in, develops, licenses, and enforces patented technologies in the United States. It assists patent owners with the prosecution and development of their patent portfolios. This is a tough stock to invest in as its been on a downtrend. ACTG revenue and earnings are lumpy. None the less insiders continue to throw good money after what appears to be bad. Last week Chairman of the Board, directors and insiders bought a total of $626.4 k worth of ACTG.
Safety Income & Growth SAFE Chairman and CEO Jay Sugarman and COO and CFO Geoffrey Jervis recently adopted 10b5-1 pre-arranged trading plans. The plan calls for the purchase of up to $25M in common stock when the market price per share is below $20.00 and will accelerate with declines in the market price. Purchases will be allocated 98% to iStar – an entity established by Jay Sugarman. The remainder will be allocated equally between the trusts established by Sugarman and Jervis. The company invests in ground leases and is the only publicly available play on this strategy. My friend, Glenn Mintz, and Top Barron’s Advisor over at UBS says its one of his favorite ideas. and Barons. Glenn thinks that some of these ground leases will get converted into ownership of vastly improved properties when owners default. I don’t see how the market gets that inefficient but it’s certainly a safer way to invest in real estate as the improvements on the property almost certainly guarantee of value greater than just the underlying land. Nothing is fool-proof , though, and with a low yield, SAFE looks safe indeed but no home run.
Lexicon Pharmaceuticals LXRX focuses on the development and commercialization of pharmaceutical products for the treatment of human diseases. The company offers XERMELO, an orally-delivered small molecule drug candidate for the treatment of carcinoid syndrome diarrhea in combination with SSA therapy in adults. Its orally-delivered small molecule drug candidates under development comprise Sotagliflozin that is in Phase 3 clinical trials for use in the treatment of type 1 and type 2 diabetes. CEO Coats bought 30,000 shares at $12.54 after the New England Journal of Medicine, or NEJM, published the results of the Phase 3 inTandem3 study of sotagliflozin. Although the trial met its end points, worries about FDA approval weighed on the stock. Lexicon sold off on increased competition concerns, said Citi analyst Yigal Nochomovitz. He has a Buy rating on Lexicon with a $35 price target. Bio-techs are good candidates for “inside information” as conventional sources of information are worthless for blinded drug trials that closely guard results.
Spirit Airlines SAVE. Two directors took advantage of this discount airline’s price drop, purchasing $236k of stock. We prefer American, United, Delta, and Southwest to Spirit as they all have insider buying.
Selling
Great Plains Energy GXP Although not large dollar amounts, six insiders at Kansas and Missouri utility company GXP sold shares ranging from 2.3% to 26.7% of their holdings.
Gencor Industries GENC 5 insiders sold stock holdings worth $1.0 million and in the case of Director Dondero, 100% of his holdings. Mr. Dondero has been a director since 2008. Even more disconcerting is the CFO Mellen sold $194.5k representing 50% of his holdings. Ouch. Gencor Industries, Inc. sells its products primarily to the highway construction industry. An infrastructure bill could send this name skyrocketing so it’s not apparent to me why they are selling. Most financial metrics are improving. Perhaps they are taking advantage of a stock prices not seen since 2007. If they are selling, maybe you should be too?
Nvidia NVDA Three insiders took advantage of record high stock prices to unload $43.1 million of this high flying semi company. Director Jones sold 17.9% of his holdings. NVDA is a short ideas as no semi conductor company has a sustained 50 P.E. Jim Cramer named his dog Nvidia. That’s pretty much a classic top in my book. Tread carefully shorting high flyers. The most money I’ve ever lost on a stock in a single day was shorting a company, that eventually went bankrupt. “The market can be irrational longer than you can be solvent.”Jesse Livermore, Bernard Baruch, and others.
Camping World Holdings CWH. Three insiders executed planned sales of $10.3 million worth of CWH. The unusual aspect of these sales is that they represent from 45.6% to 70.9% of their holdings. Perhaps the Gander World acquisition out of bankruptcy is not going as well as planned. Also CWH announced a special cash dividend of 7.3cts and these insiders seem to have sold just after the ex date. I would say only CNBC celeb and CWH Chairman of the Board, Marcus Lemonis knows the answer to this but based on all these other insiders dumping stock, maybe its no secret. On July 13th JPMorgan analyst Ryan Brinkman upgraded Camping World to Overweight and raised his price target for the shares to $38 from $37. The recreational vehicle industry backdrop is stronger than expected with shipments continuing to rise to new all-time highs, Brinkman tells investors in a research note. He sees potential upside to consensus estimates. More analysis is needed on this name before I can recommend shorting. It is one of the areas of retailing that seems to have some insulation from Amazon. I will call CWH investor relations next week to see if I can get any clarity on this unusual insider selling.
National CineMedia NCMI. major shareholder American Multi-Cinema throws in the towel dumping 81.1% of holdings near a 52 wk. low. With attendance down across all theatre chains, its understandable why in theatre advertising sucks. This could be an interesting pairs trade shorting NCMI and going long AMC where there is substantial insider buying. AMC is about to roll out monthly subscriptions where you can see all the movies you want for one fixed price. This could be exactly what the beleaguered movie industry needs.