There wasn’t much happening in new insider buys but when CEO Angrick bought 94,567 shares of Liquidity Services at $7.57, it lit a match under this dormant stock. LQDT roared 43% on this vote of confidence.  Liquidity Services operates a network of e-commerce marketplaces. Its online auction marketplaces include: Liquidation.com, GovDeals.com, Network International, GoIndustry DoveBid, IronDirect, Machinio, and Secondipity.com.

Indra Nooyi has been regularly adding to her Amazon holdings since becoming a director.  This purchase of 92 shares of AMZN at $3,193.22 looks more like the former Pepsi CEO is just dollar cost averaging some of her wealth into Amazon rather than timely market buys. Most investors would be wise to emulate this practices.  According to Nerd Wallet:

Dollar-cost averaging is the strategy of spreading out your stock or fund purchases, buying at regular intervals and in roughly equal amounts. When done properly, it can have significant benefits for your portfolio. This is because dollar-cost averaging “smooths” your purchase price over time and helps ensure that you’re not dumping all your money in at a high point for prices.

Dollar-cost averaging can be especially powerful in a bear market, allowing you to “buy the dips,” or purchase stock at low points when most investors are too afraid to buy. Committing to this strategy means that you will be investing when the market or a stock is down, and that’s when investors score the best deals.

Director Anderson bought 4,607 shares of Medtronics at $108.52.  Last time he bought the medical giant, MDT, was on 12-6-19 with his purchase of 5,000 shares at $113.29 and before then with 10,900 shares at on 5-4-19 at $92.40.  There isn’t much to go to school on here other than he looks like he’s doing what other smart investors do, dollar cost averaging. Medtronic like a lot of med tech companies has had revenues suffer as elective procedures were postponed due to Covid-19.  Elective is a misnomer in my opinion.  Eventually these procedures will get done, not delayed any longer.

 

While we were accumulating our position in SBE, Kyle Bass, filed a 13G showing he had accumulated 9% of the company.  He tweeted “Today we filed a 9% ownership stake in Switchback Energy (SBE).  Switchback is merging with ChargePoint which is already the largest EV charging network in the US.  With 4,000 commercial customers, 62% of the Fortune 50 are using ChargePoint.

Switch Back Energy is a SPAC that was recently combined with ChargePoint.  Chargepoint is a global leader in the emerging electric vehicle charging infrastructure. There are currently four significant players in this market, Tesla, Electrify America, EVgo, and Chargepoint. Volkswaggen owns Electrify America, LS Power, privately owned, bought EVgo. It’s an unprecedented market opportunity.  California has banned combustion engine automobile sales after 2030.  It’s not hard to imagine that happening across the nation.  

Founded in 2007, ChargePoint is a category creator in EV charging, helping to make the mass adoption of electric mobility a reality. It operates in every segment, from commercial to fleet to residential. ChargePoint has created one of the world’s largest charging networks with a capital-light model by selling individual organizations and businesses, known as site hosts, everything they need to electrify their parking spaces – networked charging hardware, software subscriptions and associated support services. Charging is matched to parking duration, from energy-managed AC level 2 to DC fast charging. The parking spaces owned by ChargePoint’s site hosts are seamlessly integrated into one network available to the driver in a top-rated mobile app. ChargePoint’s winning operating model and high-quality solutions foster loyal site hosts who expand their charging footprint as EV penetration rises, creating a virtuous loop of brand awareness, satisfied drivers, organic networked charging hardware and recurring SaaS revenue. 

SBE, which will change its name to ChargePoint,  serves customers through its software-defined hardware portfolio, comprehensive suite of software solutions and robust network and services designed for a wide range of use cases. ChargePoint’s offerings have attracted a growing customer base of more than 4,000 organizations and businesses, building a network of more than 115,000 public and private places to charge.

Prior to going public with a SPAC, ChargePoint had attracted funding from both private venture investors and large strategic investors, including German automakers Daimler AG ,BMW, and the venture arm of oil company Chevron Corp.  There is no way to properly value ChargePoint.  The electrification of the transportation market is a generational event and probably the most significant technological change since the advent of the Internet. 

ChargePoint seems a likely long term leader. There will undoubtedly be consolidation and intense competition in the race to EV charging infrastructure dominance.   At the moment, SBE is the only way to play it in the public markets besides Tesla.

 

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Insiders sell stock for many reasons, but they generally buy for just one – to make money. You’ve always heard the best information is inside information.  Everyone who has any experience at all in the stock market pays close attention to what insiders are doing.  After all, who knows a business better than the people running it?  Officers, directors, and 10% owners are required to inform the public through a Form 4 Filing any transaction, buy, sell, exercise, or any other with 48 hours of doing so. This info is available for free from the SEC’s Web site, Edgar, although we subscribe to SECForm4  as they provide a way to manage and make sense of the vast realms of data. I’ve tried a lot of vendors and SECForm4 is one of the most customer friendly and responsive I’ve used. This is as close to “insider information” that an ordinary investor is likely to see- and it’s entirely legal. 

BEWARE– Following insiders can be hazardous to your financial health unless you know what you are doing.  Unlike the raw, unfiltered data, The Insiders Fund blog informs you of the purchases that count, the ones that are just window dressing into deceiving the public that all is hunky dory, and those that are just flat out other people’s money and should be just discarded like bad fish. As a rule, we only look at material amounts of money, $200 thousand or more, as anything less could just be window dressing.

The bar is different from selling because the natural state of management is to be sellers. This is because most companies provide significant amounts of management compensation packages as stock and options. Therefore, with selling, we analyze for unusual patterns, such as insiders selling 25 percent or more of their holdings or multiple insiders selling near 52-week lows. Another red flag is large planned sale programs that start without warning. Unfortunately, the public information disclosure requirements about these programs referred to as Rule 10b5-1 is horrendously poor. Also planned sales that just pop up out of nowhere are basically sales and are seeking cover under the Sarbanes Oxley corporate welfare clause. I also generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and perhaps not the smart money we are trying to read the tea leaves on.

Of course insiders can also be wrong about their Company’s prospects. Don’t let anyone fool you into believe they never make mistakes.  No one tracks and understands insider behavior better than us. We’ve been doing it religiously since 2001, when I quit being an insider myself and devoted myself full time to managing my personal investments. They can easily be wrong about how much others will value them, and in many cases, maybe most cases have no more idea what the future may hold than  you or I. In short, you can lose money following them.  We have and we curse aloud, what were they thinking!  Needless to say, past good fortune is no guarantee of future success.  We may own positions, long or short, in any of these names and are under no obligation to disclose that. We welcome your comments on our analysis.

This blog is solely for educational purposes and the author’s own amusement.  Investing with The Insiders Fund is for qualified investors and by Prospectus only. Nothing herein should be construed otherwise.  THE INSIDERS FUND invests in companies at or near prices that management has been willing to invest significant amounts of their own money in.  If you would like to hear more about how you can get involved with the Insiders Fund, please schedule some time on my calendar.

Prosperous Trading,

Harvey Sax

The Insiders Fund was the 4th best long-short equity fund in the world in 2019