The efficient market hypothesis assumes that all current information is reflected in the current price of a security. According to the EMH, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices. When we look at insider buying and selling, we are examining and theorizing the possible motives of the people that know the company the best. What information do they possess that is not already priced into the stock?
Name: Moskovitz Dustin A
Position: CEO Chairman 10% Owner
Shares Bought:320,000, Average Price Paid:$57.92, Cost: $18,535,616
Company: Asana Inc. (ASAN)
Asana is a web and mobile application designed to help teams organize, track, and manage their work. Forrester, Inc. reports that “Asana simplifies team-based work management. Asana helps teams orchestrate their work, from small projects to strategic initiatives. Headquartered in San Francisco, CA, Asana has more than 100,000 paying customers and millions of free organizations across 190 countries. Global customers such as Amazon, Japan Airlines, Sky, and Under Armour rely on Asana to manage everything from company objectives to digital transformation to product launches and marketing campaigns.
Opinion: ASAN is a complete head-scratcher. With 72,667,057 shares owned as reported on December 30, 2020, Mosky certainly doesn’t need more shares. Moskovitz has bought now close to $70 million of stock in prearranged buying program at ever-higher prices. In typical cloud software fashion, Asana is growing like a weed, revenue up 59% quarter over quarter, losing millions in the process. Does it really even matter? As long as revenues are growing and Mosky is buying all the shares, who is going to sell?
It’s just another reason the SEC needs to fix the rules on 10b5-1. The SEC should require these 10b5-1 plans to be made public. I’m sure all the people that sold their stock in the $30s this year would have liked to have known that the founder billionaire was going to buy at least $70 million shares of stock and still counting. As far as I can tell this was never made public. I would be willing to bet big dollars that his buddies at Benchmark and perhaps others knew about it.
Name: Staglin Garen K
Position: Director”E
Shares Bought:500, Average Price Paid:$553.94, Cost: $276,970
Company: Svb Financial Group (SIVB)
Silicon Valley Bank, a subsidiary of SVB Financial Group, is a U.S.-based high-tech commercial bank. The bank has helped fund more than 30,000 startups. SVB is on the list of largest banks in the United States. It’s the biggest bank in Silicon Valley. The bank’s primary strategy was collecting deposits from businesses financed through venture capital. It then expanded into banking and financing venture capitalists themselves and added services to allow the bank to keep clients as they matured from their startup phase.
Opinion: Regional banks were amongst the hottest sectors in the market until the Fed started downplaying the need to raise rates anytime soon. The market isn’t buying it and a flattening yield curve doesn’t help the spread banks make on their core business. I’ve noticed a few bank officers buying shares of lesser-known banks. This is probably a good trade but with limited alpha.
Name: Whitlock Gary L
Position: Director
Shares Bought: 10,000, Average Price Paid:$48.93, Cost: $489,300
Company: Enviva Partners LP (EVA)
Enviva is the world’s largest producer of sustainable wood pellets, a renewable alternative to coal. Wood-based bioenergy is part of an all-in renewables strategy to reduce carbon emissions and limit dependence on fossil fuels. Enviva exists to displace coal, grow more trees, and fight climate change.
Opinion: Everyone from Bill Gates to Joe Biden is stressing the importance of renewables. No electric utility company in this country has built a coal-fired power plant since 2011 and it seems unlikely one will ever be built again in this country without a carbon capture solution which at this time is not viable. The oldest form of heating is probably a caveman huddling around a wood-burning fire. However, Envivia Partners has also been controversial regarding its sustainability. An environmental group’s analysis suggested that Enviva is responsible for 50 acres a day of clear-cut land and significantly increased CO2 production than coal per megawatt-hour.
Name: Hamm Harold
Position: Director 10% Owner
Shares Bought: 76,486 , Average Price Paid: $34.47, Cost: $2,636,576
Company: Continental Resources Inc (CLR)
Continental Resources (NYSE: CLR) is a Top 10 independent oil producer in the U.S. Lower 48 and a leader in America’s energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and one of the largest producers in the nation’s premier oil field, the Bakken of North Dakota and Montana. The Company also has leading positions in Oklahoma, including its SCOOP Woodford and SCOOP Springer discoveries and the STACK and Northwest Cana plays. With a focus on the exploration and production of oil, Continental has unlocked the technology and resources vital to American energy independence and our nation’s leadership in the new world oil market.
Opinion: Damn if the original homey wildcatter himself is not back to life. Growing up in rural Oklahoma, Mr. Hamm went to work in the oil fields as a teenager and established Continental Resources in 1967 at the age of 21. He built a grassroots startup into an NYSE-traded, Top 10 oil producer in the U.S. Lower 48. As a voice for America’s oil and natural gas industry and as the leader of one of America’s top E&P companies, he has helped to make America energy independent.
Donald Trump may have been good for oil prices at the pump with his full-throated support for unleashing America’s domestic hydrocarbon reserves but Joe Biden has been the second coming for the stock market investors. West Texas crude is at 2 year high and with lowered incentives, more environmental restrictions, and the economy coming back from the Pandemic, the price is likely to keep rising. Oil stock prices are 80% correlated to the price of the underlying commodity. Oil may be losing its role as a transportation fuel but the jury is far from out in my opinion as to whether EV vehicles with lithium batteries are the answer. Pro hint- I’m a Tesla owner.
U.S. oil production could surprise in either direction according to the experts. While a further increase in the rig count will be needed before production starts to rise, the U.S. shale industry has repeatedly proved more innovative and resilient to price collapses than expected.
Name: Little David R
Position: CEO Chairman 10% Owner
Shares Bought:30,021, Average Price Paid:$28.67, Cost : $860,702
Company: Dxp Enterprises Inc (DXPE)
DXP Enterprises, Inc. is a leading product and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, and Dubai. DXP provides innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (‘MROP’) services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metalworking, industrial supplies, and safety products and services. DXP’s breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions, and Supply Chain Services.
Opinion: Nice 15% move here but is there more to run? I think so. DXPE as a diversified play on U.S reshoring industries, strengthening the supply chain, and investment in renewable infrastructure.
Name: Van Nieuwenhuyse Rick
Position: CEO
Shares Bought: 47,619, Average Price Paid: $21.00, Cost: $999,999
Company: Contango ORE Inc. (CTGO)
Contango ORE, Inc. recently completed a transaction that repositions the Company as a well-capitalized US gold developer with a clear path to producing on average 65,000 GEO/year at AISC of $750/GEO. With less than 6 million shares issued and $35 million cash on hand, the Company can quickly meet its obligations to fund through to production without dilution. Think about the free cash flow per share at current gold prices! How can we do this? The Company recently formed a new partnership with Kinross Gold Corporation – The Peak Gold JV (Kinross 70% and Contango 30% with Kinross as Manager and Operator). The Peak Gold JV will be processed at Kinross’s existing Fort Knox mining and milling complex.
Opinion: None
Position: Director
Shares Bought:20,013, Average Price Paid:$19.69, Cost: $394,056
Company: Adams Diversified Equity Fund Inc (ADX)
Adams Funds is composed of two of the country’s oldest closed-end equity funds – Adams Diversified Equity Fund, Inc. (NYSE: ADX) and Adams Natural Resources Fund, Inc. (NYSE: PEO). As closed-end funds, shares of each Fund’s common stock are listed and traded on the New York Stock Exchange. For over 85 years, both Funds have been internally managed and have generated capital growth and income through portfolio performance, dividends, and distributions. The Funds are managed by an experienced team employing a disciplined approach to identify investment opportunities and carefully manage risk.
Opinion: At least the chef is eating his own cooking. He’s having a good year too.
Name: Hawks Carney
Position: Director
Shares Bought:13,320, Average Price Paid:$17.61, Cost: $234,565
Company: Ferrellgas Partners LP (FGPR)
For more than 75 years, Americans have relied on Ferrellgas for their home, business, agricultural, and fleet propane needs. A publicly traded (NYSE: FGP), Fortune 1000 company, Ferrellgas serves approximately one million customers in all 50 states, the District of Columbia, and Puerto Rico. Ferrellgas Employees indirectly own more than 20 million common units of the partnership through an Employee Stock Ownership Plan, or ESOP. At Ferrellgas, they are in the business of providing meaningful moments, memories full of warmth, dependability you can trust, and outcomes you had only dreamed possible. Whatever your day has in store, they’re here to fuel what matters to you.
Opinion: FGPR is a pink sheet listed company. Listen to a replay of our Fiscal 2021 Q2 Earnings Call here. Ferrellgas Partners, L.P. is a publicly traded Master Limited Partnership. As of April 30, 2021, they had 4,857,605 units, with our employees indirectly owning 1,138,812 units of the partnership through an Employee Stock Ownership Plan. They suspended the dividend in October 2018 and came out of bankruptcy in March 2021. How many Fortune 1000 companies have a market cap of less than $100 million? This is the second purchase in as many weeks as Hawks purchased 15,669 at $15.23 the prior week. There is something up here and it smells good.
For the quarter ending April 30th, 2021, reading the 10Q the Company reported distributable excess cash flow of $68,936 Million. For the twelve months ended April 30, 2021, distributable cash flow attributable to equity investors increased $35.6 million compared to the twelve months ended January 31, 2021. We declared an $8.0 million quarterly distribution to Preferred Unitholders on April 30, 2021 and paid this distribution in May 2021. No cash distributions have been paid to our Class A unitholders since the three months ended October 31, 2018. Thus, cash reserves, which we utilize to meet future anticipated expenditures, increased by $107.5 million during the twelve months ended April 30, 2021, compared to an increase of $79.9 million in the twelve months ended January 31, 2021.
Our ability to make cash distributions to holders of Class A Units and Class B Units is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership, which are limited by our obligations in respect of the Preferred Units and the terms of the indentures governing the 2026 Notes and 2029 Notes, the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units and may be limited by a variety of other factors. Accordingly, we may be unable to make cash distributions to holders of Class A Units and Class B Units, and we do not anticipate making any such cash distributions in the near future.” Bottom line I have no idea why this Director is buying but you can be certain that there is a reason.
Opinion: As I understand it, CLI is making a bold pivot, unloading most of their office space properties and betting the farm on a transformation of the Jersey part of the Hudson River across from Manhattan into a mixed-use residential urban answer to living in the very expensive city. This is the third big purchase this year by Bow Partners. We don’t normally pay much attention to hedge fund purchases but we like it and blogged about this before.
Position: Director
Shares Bought: 450,000, Average Price Paid: $16.56, Cost: $7,453,740
Company: Mack Cali Realty Corp (CLI)
One of the country’s leading Real Estate Investment Trusts (REITs), Mack-Cali Realty Corporation is an owner, manager, and developer of premier office and multifamily properties in select waterfront and transit-oriented markets throughout the Northeast. Mack-Cali is headquartered in Jersey City, New Jersey, and is the visionary behind the city’s flourishing waterfront, where the company is leading development, improvement, and place-making initiatives for Harborside, a master-planned destination comprised of class A office, luxury apartments, diverse retail and restaurants, and public spaces.
Position: Director
Shares Bought: 50,000, Average Price Paid:$15.20, Cost : $760,000
Company: REV Group Inc. (REVG)
REV Group is an American manufacturer of specialty vehicles, including buses, fire trucks, ambulances, and recreational vehicles. The company has yearly revenue of over $1 billion. The company is led by Rod Rushing, CEO, formerly of Johnson Controls. They serve a diversified customer base, primarily in the United States, through three segments: Fire & Emergency, Commercial, and Recreation. They provide customized vehicle solutions for applications, including essential needs for public services (ambulances, fire apparatus, school buses, and transit buses), commercial infrastructure (terminal trucks and industrial sweepers), and consumer leisure (recreational vehicles). Their diverse portfolio comprises well-established top vehicle brands, including many of the most recognizable names within their industry. Several of their brands pioneered their specialty vehicle product categories and date back more than 50 years. REV Group trades on the NYSE under the symbol REVG.
Opinion: Mr. Bamatter has served as a member of their Board of Directors since 2016. He was Vice President and Secretary of REV and many REV subsidiaries from 2008 until 2016. So he knows the business well and this is a big buy. His last purchase was 50,00 shares at $4.22 back in March 2020. Now he’s tripling the dollar amount at nearly 4 times the prices. That’s conviction.
Name: Carey Robert
Position: Director
Shares Bought: 350,000, Average Price Paid: $5.36, Cost: $1,876,000
Company: Beyond Air Inc. (XAIR)
Beyond Air, Inc. is a clinical-stage medical device and biopharmaceutical company developing a revolutionary NO Generator and Delivery System that uses NO generated from ambient air and delivers precise amounts of NO to the lungs for the potential treatment of respiratory conditions including, serious lung infections, pulmonary hypertension and gaseous NO for the treatment of solid tumors. The Beyond Air NO Delivery System can generate up to 400 ppm of NO for delivery either continuously or for a fixed amount of time and has the ability to either titrate dose on-demand or maintain a constant dose. The Company is currently applying its therapeutic expertise to develop treatments for pulmonary hypertension in various settings, in addition to treatments for lower respiratory tract infections that are not effectively addressed with current standards of care. Beyond Air is currently advancing its revolutionary NO Generator and Delivery System in clinical trials for the treatment of bronchiolitis and severe lung infections such as nontuberculous mycobacteria (NTM) and COVID-19. Beyond Air has also developed a proprietary system for delivering gaseous nitric oxide at high concentrations to treat solid tumors.
Opinion: This is a large purchase and it’s his second since March. Two other insiders bought a small number of shares. The CEO and CFO purchased 25,000 and 1000 shares respectively. This really goosed the stock last week, up 34%. I wouldn’t touch it here and wait for a pullback. Small-cap biotech has acted a lot better since the Biogen Alzheimer drug approval. Although the Company mentioned a $3 billion dollar market opportunity, I’m not in a position to affirm that or for that matter, neither is Director Carey as he is an investment banker, not a scientist. In vitro they demonstrated the potential utility of gNO as a treatment for cancer. If that’s the case, there’s a $23 billion dollar pot of gold under the rainbow.
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Insiders sell the 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.
We publish a subscription newsletter called The Insiders Report. We offer a free 30-day trial so you have nothing to lose by trying it out. Be sure to carefully read the TERMS OF SERVICE.
Another source for insider buying and selling and much more is FinViz Elite. FinViz stands for financial visualization and they do an amazing job of providing reams of data and the tools to help you get to the bottom of it, the information that helps me make informed decisions and probable outcomes. I’ve been using their site for years and it only gets better over time.
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 believing 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, 4th Best in November 2020, 4th Best in January 2021 (I kid you not)
