Insider Buying week 9-10-21 This is Trickery of the Highest Order

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September is living up to its reputation as the worst-performing month of the year and we’re just getting started.  U.S. stocks fell for a fifth straight day on Friday, with the S&P 500 ending the week down 1.7 percent in its longest losing streak since February.  But that’s just a diversion from the bigger story.

When the game you’re playing makes no more sense, is it time to walk away from the game? Have the rules changed in some way that’s beyond your comprehension?

This is trickery of the highest order. It’s an illusion of arithmetic and the power of the masses. That’s all well and good for AMC and GameStop, Vinco Ventures, or whatever the latest short squeeze might be but when Dustin Moskovitz ponies up $72.3 million to buy 750,000 shares at an average price of $96 when he just sold those shares less than a year ago at $27.34, one has to question if someone has spiked the water with some new previously unheard of hallucinogen that prints money out of thin air.

The stock market has always been the biggest multiplayer game played in the metaverse. It seems like only a matter of time before Robin Hood merges with Draft Kings. Fundamental analysis will morph into the P.E. ratio over the Point Spread.  Which pill do you want, the blue one or the red one? Do you want to cash out in dollars, chips, or crypto?

Name: Moskovitz Dustin A
Position: CEO Chairman 10% Owner
Transaction Date: 2021-09-08 Shares Bought: 750,000 Average Price Paid: $96.49 Cost: $72,367,612
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. Asana, Inc. offers a work management platform. The Company’s platform enables teams to orchestrate work, from daily tasks to cross-functional strategic initiatives. With its solution, Asana enables individuals to manage and prioritize across each of the projects. Its solution enables individuals to collaborate with teammates and have visibility into each team member’s responsibilities and progress. The Asana solution aids the team leads to manage work across a portfolio of projects or processes. The Company enables executives to communicate company-wide goals, monitor status, and oversee work across projects to gain real-time insights into which initiatives are on track or at risk. Asana is powered by its multidimensional data model called the work graph. The work graph captures and associates work units, the people responsible for executing those units of work, the processes in which work gets done, information about that work, and the relationships across and within the data.

Dustin Moskovitz is the co-founder and CEO of Asana. As Asana’s CEO, Dustin is dedicated to creating a product that helps the world’s teams collaborate effortlessly, in addition to leading the company’s award-winning culture. Prior to founding Asana, Dustin co-founded Facebook and served as the company’s first Chief Technology Officer and VP of Engineering.

Opinion: We wrote about ASAN on June 27th, If You sold ASAN in the $30s, you should ask the SEC where were they?

ASANA is up 160% this year and he’s buying $72 million more worth of stock?  Hell, the company only had $89.5 million of revenue for the entire quarter and with a 72% quarter-over-quarter increase in revenues still managed to lose  $68.4 million compared with $41.1 million the previous year.  Even with the infamous Silicon Valley adjusted earnings shenanigans Asana still managed to lose money, $39.8 million.

It’s not like he needs more shares either.  Moskowitz had a control share position of 38% when the company did a direct listing at the end of September 2020. In fact, he was selling shares at the time but now buying them back at nearly three times the price.   Moskovitz sold 900,000 shares at $27.34 on 9-30-20.  Last week he paid $96.49 to buy back 750,000 of those shares. I suppose this is all pocket money to him, not much more than betting on last Thursday’s Tampa Bay Dallas Cowboys football game.  And the stock will likely go up, too. After all, Moski is buying.

Name: Holmes Rob C
Position: CEO
Transaction Date: 2021-09-03 Shares Bought: 8,308 Average Price Paid: $60.29 Cost: $500,889
Company: Texas Capital Bancshares Inc. (TCBI)
Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, National Association that provides various banking products and services for commercial businesses, professionals, and entrepreneurs. It offers business deposit products and services, including commercial checking accounts, lockbox accounts, and cash concentration accounts, as well as other treasury management services, including information services, wire transfer initiation, ACH initiation, account transfer, and service integration; and consumer deposit products, such as checking accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides commercial loans for general corporate purposes comprising financing for working capital, internal growth, and acquisitions, as well as financing for business insurance premiums; real estate term and construction loans; mortgage warehouse lending; mortgage correspondent aggregation; equipment finance and leasing; treasury management services, including online banking and debit and credit card services; escrow services; and letters of credit. In addition, it offers personal wealth management and trust services, secured and unsecured loans, and online and mobile banking services. Further, the company provides American Airlines AAdvantage, an all-digital branch offering depositors. It operates in Austin, Fort Worth, Dallas, Houston, and the San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was founded in 1996 and is headquartered in Dallas, Texas.

Rob C. Holmes serves as President, Chief Executive Officer, and a member of the Board of Directors of Texas Capital Bank and its parent company, Texas Capital Bancshares, Inc. (NASDAQ®: TCBI). Holmes joined Texas Capital Bank in January 2021 after a 31-year career at JPMorgan Chase & Co., most recently serving as Global Head of Corporate Client Banking and Specialized Industries since 2011. In this position, he oversaw end-to-end responsibility for the business, providing global treasury management services, credit and investment banking solutions to clients in North America, and select countries in Europe and Asia, to help clients achieve their long-term corporate finance objectives.

Opinion: There has been a pick-up in regional bank buying. Several analysts downgraded TCBI last week when the new CEO updated the investment community on the banks’ turnaround strategy.  Rob Holmes came over to the bank in October of last year after spending more than three decades at JP Morgan.  This is his first open-market buy  He brought along some folks from JP Morgan including Chief Risk Officer Storms who bought $249,671 worth at $59.83 per share.

Wedbush, Raymond James, and Janney Montgomery Scott all downgraded the company moving their price targes down to the low $70s. Texas’s economy is increasingly diversified away from oil and gas although that sector is doing well in spite of all the ESG uproar against hydrocarbons. The reality is divesting investments is a lot easier than eliminating hydrocarbons from our daily lives.  This is probably dead money here for a while although low $70s would be a great return from its closing price of $56.59 per share last Friday.

Name: Waters Gregory L
Position: Director
Transaction Date: 2021-09-07 Shares Bought: 17,000 Average Price Paid: $45.26 Cost: $769,420
Company: On Semiconductor Corp. (ON) ON Semiconductor Corporation, together with its wholly and majority-owned subsidiaries (“ON Semiconductor, was spun off from Motorola in 1999)  What happened to a great iconic company like Motorola is really an American Horror show of mismanagement, lack of innovation and running headlong into Steve Jobs of Apple computers and the iPhone.  Never the less the bastard children survive and recently have flourished. Taken from the K:

Gregory L. Waters has served as a director of on semi since December 2020. Mr. Waters brings to the board over three decades of management experience in the semiconductor industry. He served as President and Chief Executive Officer of Integrated Device Technology (IDTI), a semiconductor manufacturer, from January 2014 to March 2019. Before joining IDTI, Mr. Waters served as Executive Vice President of Skyworks Solutions, Inc., a global leader of semiconductors for mobile communications systems from 2003 to 2012, and Senior Vice President of Agere Systems Inc., the components of a communication company, from 1998 to 2003. He also held multiple roles at Texas Instruments from 1983 to 1998. Mr. Waters has served as a member of the board of directors of Sierra Wireless (SWIR) since March 2020.

Opinion: All things semi-conductors are hot. Don’t overthink this one but still don’t lose track of what you pay. The market is poised for a sell-off and even insider buying in a hot sector won’t insulate from a real downdraft.

Name: Ponton Brett
Position: CEO
Transaction Date: 2021-09-03 Shares Bought: 5,982 Average Price Paid: $41.66 Cost: $249,186
Company: Terminix Global Holdings Inc. (TMX)
Terminix International Company, L.P. is one of the largest pest control companies globally, operating in 47 states in the United States and 22 countries around the world. It is a subsidiary of Terminix Global Holdings, Inc. Terminix Global Holdings, Inc. provides residential and commercial termite and pest management services. It offers termite and pest control services, including termite remediation, annual termite inspection, prevention treatments with termite damage repair guarantees, periodic pest control services, insulation services, crawlspace encapsulation, wildlife exclusion, and disinfection services. The company serves under the Terminix, Assured Environments, Copesan, Gregory, McCloud, Nomor AB, and Pelias brands. It markets its services to homeowners and businesses through digital marketing, television and radio advertising, print advertisements, marketing partnerships, door-to-door summer sales programs, telemarketing, and various social media channels and through national, regional, and local sales teams. The company was formerly known as ServiceMaster Global Holdings, Inc. and changed its name to Terminix Global Holdings, Inc. in October 2020. Terminix Global Holdings, Inc. was founded in 1929 and is headquartered in Memphis, Tennessee. Over the first three months of 2009, Terminix acquired nine pest management companies across seven states. In December 2012, Terminix closed six acquisitions adding over $10 million in revenue. In 2013, Terminix acquired two Canadian pest control companies, Magical Pest Control, based in Toronto, and Vancouver-based Care Pest & Wildlife Control. During the first five months of 2014, Terminix acquired eight pest and wildlife control companies in ten states. Terminix’s parent company, ServiceMaster, held its IPO in June 2014. In November 2015, Terminix acquired the Utah-based company Alterra Pest Control.

Brett Ponton joined as CEO and member of the board of directors in September 2020. He joined Monro, Inc. (Nasdaq: MNRO), serving as president and chief executive officer of the largest independent operator of tire and auto service retail stores in the U.S. Mr. Ponton has nearly 25 years of experience with distributed service organizations, including leading both company-owned and franchise operations. He has a strong track record of implementing operational excellence and process improvement initiatives at those companies, leading to enhanced customer experience, stronger company culture, and improved employee retention. While at Monro, Ponton led a successful transformation strategy to improve growth, profitability, and customer service across an organization encompassing 8,500 employees (including 6,000 technicians), 1,250 company-owned stores, 100 franchised locations, and a commercial B2B business.

Opinion: This is a boring story, very typical of the kind of private equity gamesmanship and mediocre returns.  Insider Report readers should be grateful that I’ve spent my weekend reading and analyzing this so they don’t have to. As a rule of thumb whenever you see private equity and brand name companies mentioned together, investors should take their chips off the table and move on.  There are more rewarding games to play. This one is no exception.

Name: Acosta Arcilia
Position: Director
Transaction Date: 2021-09-07 Shares Bought: 15,000 Average Price Paid: $35.85 Cost: $537,767
Company: Veritex Holdings Inc. (VBTX)
Veritex Holdings, Inc. operates as the bank holding company for Veritex Community Bank that provides various commercial banking products and services to small and medium-sized businesses, and professionals. The company accepts deposit products including demand, savings, money market, and time accounts. Its loan products include commercial, mortgage warehouse, commercial real estate, construction and land, 1-4 family residential, paycheck protection program, farmland and agricultural, multi-family residential, and consumer loans; and purchased receivables financing. The company also provides a range of online banking solutions, such as access to account balances, online transfers, online bill payment and electronic delivery of customer statements, and ATMs, as well as mobile banking, mail, and personal appointment. In addition, it offers debit cards, night depository services, direct deposits, cashier’s checks, and letters of credit; treasury management services, including balance reporting, transfers between accounts, wire transfer initiation, automated clearing house origination, and stop payments; and cash management deposit products and services consisting of the lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts, and sweep accounts. As of December 31, 2020, the company operated 25 full-service branches and one mortgage office located in the Dallas-Fort Worth metroplex; 12 full-service branches in the Houston metropolitan area; and one branch in Louisville, Kentucky. Veritex Holdings, Inc. was founded in 2009 and is headquartered in Dallas, Texas.

Arcilia Acosta joined our board in February 2021.  Ms. Acosta is the founder, CEO, and President of CARCON Industries and Construction. Ms. Acosta is a celebrated 30-year business veteran. Her company, CARCON Industries, and Construction is a full-service construction firm based in Dallas with offices throughout Texas. CARCON is a 100% Minority/Woman-Owned Business Enterprise that specializes in transportation, industrial, commercial, and education construction. Ms. Acosta served as a member of the Board of Directors of Legacy Texas Financial Group, N.A., a bank holding company with an asset size of $9Billion. She currently serves on the Boards of Vistra Corporation and Magnolia Oil & Gas Corporation. Previously, she has served on the Boards of TPG Pace Energy Holdings Corporation, ONE Gas, Incorporated, and more than 10 years at Energy Future Holdings Corporation.

Opinion:  Another regional banking buy.;  In an improving economy, with interest rates likely to rise, this is a good backdrop for the group.

Name: Dixon Denmar John
Position: Director
Transaction Date: 2021-08-31 Shares Bought: 13,636 Average Price Paid: $33.00 Cost: $449,988
Company: RumbleOn Inc. (RMBL)
RumbleOn, Inc. is a technology-driven, motor vehicle dealer and e-commerce platform provider disrupting the vehicle supply chain using technology that aggregates, processes, and distributes inventory. RumbleON, Inc. operates an e-commerce platform that aggregates and distributes pre-owned vehicles to and from consumers and dealers in North America. It operates in three segments: Powersports, Automotive, and Vehicle Logistics and Transportation. The Powersports segment distributes motorcycles. The Automotive segment distributes cars and trucks. The Vehicle Logistics and Transportation Service segment provides automotive transportation services primarily between dealerships and auctions. It operates a platform that facilitates the ability of all participants in the supply chain, including RumbleOn, other dealers, and consumers to buy-sell-trade-finance-transport pre-owned vehicles. The Powersports segment consists of the distribution principally of motorcycles and other Powersports vehicles and includes the activities of its finance company operations. The automotive segment distributes cars and trucks. The Company’s vehicle logistics and transportation service segment provide automotive transportation services between dealerships and auctions. The company was formerly known as Smart Server, Inc. and changed its name to RumbleON, Inc. in February 2017. RumbleON, Inc. was incorporated in 2013 and is based in Irving, Texas.

Denmar J. Dixon serves as Independent Director of the Company Mr. Dixon served as a director of Walter Investment from April 2009 (and for its predecessor since December 2008) until June 2016. Effective October 2015, Mr. Dixon was appointed Chief Executive Officer and President of Walter Investment and served until his resignation effective June 2016. Mr. Dixon previously served as Vice Chairman of the Board of Directors and Executive Vice President of Walter Investment since January 2010 and Chief Investment Officer of Walter Investment since August 2013. Before becoming an executive officer of Walter Investment, Mr. Dixon also served as a member of Walter Investment’s Audit Committee, Nominating and Corporate Governance Committee, and chairman of the Compensation and Human Resources Committee.

Opinion:  Think eBay Motors for motorcycles and all kinds of off-road and on-road Powersports.  This company has a checkered past and has been a pretty lousy investment. I doubt if that changes.

Name: Mccormick Robert J
Position: CEO Chairman
Transaction Date: 2021-09-03 Shares Bought: 6,194 Average Price Paid: $31.63 Cost: $195,916
Company: Trustco Bank Corp NY. (TRST)
TrustCo Bank Corp. NY operates as the holding company for Trustco Bank. The Bank provides personal and business banking services for individuals, partnerships, corporations, and other entities. The company offers checking accounts, savings accounts, retirement accounts, time deposits, money market accounts, and credit cards. Its loan portfolio comprises residential and commercial mortgages, home equity lines of credit, installment loans, and commercial loans. In addition, the company serves as executor of estates and trustees of personal trusts, employee benefit plans, corporate pension, and profit-sharing trusts. It also provides asset and wealth management services, estate planning and related advice, credit cards, trust and investment services, custodial services, and online banking services. The company currently operates 148 banking offices in Albany, Columbia, Dutchess, Greene, Orange, Putnam, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Ulster, Warren, Washington, and Westchester counties of New York; Hillsborough, Lake, Orange, Polk, Sarasota, Seminole, and Volusia counties in Florida; Berkshire County, Massachusetts; Bennington County, Vermont; and Bergen County, New Jersey. The company has focused on growing its branch network outside of its traditional markets in the Capital Region of New York State, opening offices in targeted markets in Florida and in and around the Lower Hudson Valley region of New York. The expansion strategy has enabled the company to significantly reinvigorate deposit and loan growth beyond what it had been experiencing in its slower growth traditional markets. Despite the branch expansion program, the company has controlled expenses resulting in an efficiency ratio that remains among the best in the industry.

Robert J. McCormick serves as President, Director, Chief Executive Officer of TrustCo and TrustCo Bank. He was President, Director, Chief Executive Officer of TrustCo and TrustCo Bank. He serves as Chairman, President, and Chief Executive Officer of TrustCo from January 2009 to December 2010, President and Chief Executive Officer of TrustCo since January 2004, Executive Officer of TrustCo since 2001, and President and Chief Executive Officer of Trustco Bank since November 2002. Chairman of TrustCo and Trustco Bank from November 2008 to December 2010. Director of TrustCo and Trustco Bank since 2005. Robert J. McCormick is the son of Robert A. McCormick. Joined Trustco Bank in 1995.

Opinion: Regional banks are getting some insider buying activity. We own the KRE, the S&P Regional Bank ETF.

Name: Dill Julie
Position: Director
Transaction Date: 2021-09-10 Shares Bought: 10,000 Average Price Paid: $22.56 Cost: $225,600
Company: Sterling Construction Co Inc. (STRL)
Sterling Construction Company, Inc. is a heavy civil construction company engaged in building and reconstructing transportation and water infrastructure projects in Texas, Utah, Nevada, Arizona, California, Hawaii, and other states. Founded in 1955, Sterling is a family of companies working collectively as One Sterling to deliver comprehensive resources and expertise of services. Their companies operate with autonomy and agility to ensure the integrity of their cultures. The Company’s transportation infrastructure projects include highways, roads, bridges, airfields, ports, and light rail. Its water infrastructure projects include water, wastewater, and storm drainage systems. The Company operates through a heavy civil construction segment. The Company provides its services by using traditional general contracting arrangements, such as lump-sum and cost-plus contracts. The Company serves various markets in the United States, including Texas, Utah, Nevada, Arizona, California, and Hawaii. The Company’s customers include departments of transportation in various states (DOTs), regional transit authorities, airport authorities, port authorities, water authorities, and railroads.

Ms. Julie A. Dill is an Independent Director at Sterling Construction Co., Inc. and an Independent Director at Rayonier Advanced Materials, Inc. She is on the Board of Directors at Sterling Construction Co., Inc., Rayonier Advanced Materials, Inc., American Gas Association, and Southern Star Central Corp. Ms. Dill was previously employed as an Independent Director by Inter Pipeline Ltd., an Independent Director by QEP Resources, Inc., an Independent Director by Spectra Energy Partners LP, a Chief Communications Officer by Spectra Energy Corp.

Opinion: Sterling will be a major beneficiary of the Biden infrastructure plan.  The market seems to have doubts about the enactment or certainly the timing of any infrastructure plan but a betting man/woman would give it better than 505/50 odds. The day that it gets finalized by Congress expect a handful of big construction project type names to move and Sterling will be one of them. I can’t see much happening until then.

Name: Coughlin Ron
Position: CEO Chairman
Transaction Date: 2021-09-07 Shares Bought: 46,600 Average Price Paid: $21.72 Cost: $1,012,152
Company: Petco Health & Wellness Company Inc. (WOOF)
As a fully integrated health and wellness company for pets, Petco is on a compelling growth trajectory as it redefines the pet care industry. They are a beloved pet care brand with more than 55 years of service to pets and the people who love and care for them. In recent years, They have embarked on a significant transformation, repositioning their business from a traditional retailer to a disruptive, fully integrated, digital-focused provider of pet health and wellness offerings. Their connected ecosystem – which offers premium products, services, veterinary care, and membership opportunities – Attracts high-value customers in a large and growing addressable market and creates communities that deepen the pet-pet parent bond. Petco is uniquely positioned to lead the pet care market, experiencing a rapid acceleration powered by sustainable macro trends, including increased pet ownership, greater spend per pet, and the continued humanization and premiumization of the pets. Long-term, Petco expects to deliver differentiated growth and value for its shareholders through its deep competitive advantages and unique customer insights. The entire Petco family is on a mission to improve lives for pets, their parents, and for the more than 26,000 Petco partners who work here. Together, they’re also creating a company with accelerating growth and a path to profitability that stands out among their mass, grocery, and online-only competitors.

Ron serves as Chief Executive Officer for Petco, a category-defining health and wellness company with more than 55 years focused on improving the lives of pets, pet parents, and their own Petco partners. Ron joined the company as CEO in June 2018 and is responsible for driving Petco’s business strategy, direction, and overall company performance. With more than 25 years of experience in consumer products and technology — working with some of the top brands in the world — his expertise lies in transforming businesses by honing a strategy, cultivating high–performing teams, propelling innovation, re-engineering cost structures, and driving global sales and marketing. Ron came to Petco after four years serving as President of HP’s Personal Systems segment, a $33 billion global business that offers consumer and commercial products and services.

Opinion:  You have to love the symbol and probably hate the stock.  WOOF is easy to remember.  This is another story of a good house in a bad neighborhood.  Petco went public again in 2002 after going private in 2000 in a leveraged buyout by Leonard Green Partners and Texas Pacific Group.   Their reported return on this was one of the biggest IPO takes with a 4.5X return on invested capital and IRR north of 100%.

In 2006 it was taken private again by private equity groups led by the same group, Leonard Green and Texas Pacific Group for about $1.8 billion including the assumption of debt.  I kid you not.  In 2016 it was sold to CVC Capital Partners and Canada Pension Plan Investment. for about $4.6 billion.   The Company went public again for the third time in a $900 million SPAC, opening at $26 44 above the initial price of $18  on January 14th of 2021 with the ticker symbol “WOOF”. At its current market cap of about $6.5 billion-plus another $1.6 billion in debt, it’s going to be hard to get the price moving in this mature category.  Investors like a good story and this one is kinda worn out.

Name: Bamatter Paul J
Position: Director
Transaction Date: 2021-09-09 Shares Bought: 50,000 Average Price Paid: $15.17 Cost: $758,500
Company: REV Group Inc. (REVG)
REV Group, Inc. designs, manufactures and distributes specialty vehicles and related aftermarket parts and services in the United States, Canada, Europe, Africa, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation. The Fire & Emergency segment provides fire apparatus equipment under the Emergency One, Kovatch Mobile Equipment, Ferrara, Spartan, Smeal, Ladder Tower brands, ambulances under the American Emergency Vehicles, Horton Emergency Vehicles, Leader Emergency Vehicles, Road Rescue, Wheeled Coach, and Frontline brands. The Commercial segment offers transit buses, type A school buses, sweepers, and terminal trucks under the Collins Bus, Capacity, ENC, and Lay-Mor brands. The Recreation segment offers motorized and towable RV models under the American Coach, Fleetwood RV, Holiday Rambler, Renegade, Midwest, and Lance brands; and produces a range of custom-molded fiberglass products for the heavy-duty truck, RV, and broader industrial markets. The company sells its products to municipalities, government agencies, private contractors, consumers, and industrial and commercial end-users through its direct sales force or dealer network. The company was formerly known as Allied Specialty Vehicles, Inc. and changed its name to REV Group, Inc. in November 2015. REV Group, Inc. is based in Brookfield, Wisconsin.

Mr. Bamatter has served as a member of our Board of Directors since 2016. Mr. Bamatter served as a Vice President and Secretary of REV and many REV subsidiaries from 2008 until 2016. He is also a Partner at AIP, an organization he joined in 2005. Previously, he served as Chief Financial Officer and Chief Operating Officer of Consoltex Holdings, Inc. Mr. Bamatter also served as a Senior Manager at PriceWaterhouseCoopers, where he managed the worldwide audits for several banking manufacturing multinational businesses.

Opinion: This is a sizeable buy by a long-time insider. It comes on the heels of another 50,000 share purchase back in June for $15.20 per share. Whatever is supposed to be happening sure seems like it’s going to happen.   Baird analyst thinks that fleet electrification and stimulus funding are long-term catalysts. The stock seems fully priced, dull, and unappealing to me.

Name: Letham Dennis J
Position: Director
Transaction Date: 2021-09-08 Shares Bought: 32,300 Average Price Paid: $13.96 Cost: $450,908
Company: Tenneco Inc. (TEN)
Tenneco (formerly Tenneco Automotive and originally Tennessee Gas Transmission Company) is an American automotive components original equipment manufacturer and an aftermarket ride control and emissions products, manufacturer. It is a Fortune 500 company that has been publicly traded on the New York Stock Exchange since November 5, 1999, under the symbol TEN. With headquarters in Lake Forest, Illinois, Tenneco, United States, Tenneco Inc. designs, manufactures, and sells clean air, powertrain, and ride performance products and systems for light vehicles, commercial trucks, and off-highway, industrial, and aftermarket customers worldwide. The company operates through Clean Air, Powertrain, Ride Performance, and Motorparts segments. It offers clean air products and systems, including catalytic converters and diesel oxidation catalysts; diesel particulate filters(DPFs); burner systems; lean nitrogen oxide (NOx) traps; selective catalytic reduction (SCR) systems; hydrocarbon vaporizers and injectors; SCR-coated diesel particulate filters systems; urea dosing systems; four-way catalysts; alternative NOx reduction technologies; mufflers and resonators; fabricated exhaust manifolds; pipes; hydroformed assemblies; elastomeric hangers and isolators; and after treatment control units. The company also provides powertrain products and systems, such as pistons; piston rings; cylinder liners; valve seats and guides; bearings, spark plugs; valvetrain products; system protection products; and seals, etc. gaskets. In addition, it offers motor parts, including steering and suspension, braking, sealing, engine, emission, and maintenance products, as well as shocks and struts; and ride performance products, and systems comprising advanced suspension technologies, and ride control and braking products, as well as noise, vibration, and harshness performance materials. The company was formerly known as Tenneco Automotive Inc. and changed its name to Tenneco Inc.

Dennis J. Letham CPA serves as Chairman of the Board of the Company. From 1995 until his retirement in June 2011, Mr. Letham served as Executive Vice President, Finance, and Chief Financial Officer of Anixter International Inc. He oversaw the company’s finance, accounting, tax, legal, human resource, and internal audit activities in 50 countries. Before assuming his role as Chief Financial Officer in 1995, Mr. Letham served as Executive Vice President and Chief Financial Officer of Anixter, Inc., the principal operating subsidiary of Anixter International, which he joined in 1993. Previously, he had a 10-year career with National Intergroup Inc., where he was Senior Vice President and Chief Financial Officer, as well as Vice President.

Opinion:  If Carl Icahn can’t figure out how to make money out of Tenneco, I don’t know how anyone else will be able to do it.  He’s unloading shares. I wouldn’t step in front of that.

Name: Grant W Thomas
Position: Director
Transaction Date: 2021-09-08 Shares Bought: 144,533 Average Price Paid: $12.42 Cost: $1,794,535
Company: SelectQuote Inc. (SLQT)
Founded in 1985, SelectQuote (NYSE: SLQT) provides solutions that help consumers protect their most valuable assets: their families, health, and property. The company pioneered the direct-to-consumer model of providing unbiased comparisons from multiple, highly-rated insurance companies allowing consumers to choose the policy and terms that best meet their unique needs. Two foundational pillars underpin SelectQuote’s success: a strong force of highly-trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources, scores, and routes high-quality sales leads. The company has three core business lines: SelectQuote Senior, SelectQuote Life, and SelectQuote Auto and Home. SelectQuote Senior, the largest and fastest-growing business, serves the needs of a demographic that sees 10,000 people turn 65 each day with a range of Medicare Advantage and Medicare Supplement plans from leading, nationally recognized carriers, as well as prescription drug plans, dental, vision, and hearing plans. SelectQuote, Inc. is a technology-enabled, direct-to-consumer distribution platform that provides consumers with a transparent and convenient venue to shop for complex senior health, life, and auto & home insurance policies from a curated panel of insurance carriers. The company operates through three business lines: SelectQuote Senior, SelectQuote Life, and SelectQuote Auto & Home. The SelectQuote Senior provides unbiased comparison shopping for Medicare Advantage and Medicare Supplement insurance plans as well as prescription drug plans, dental, vision and hearing, and critical illness products. SelectQuote Life provides unbiased comparison shopping for life insurance and ancillary products including term life, guaranteed issue, final expense, accidental death, and juvenile insurance. The SelectQuote Auto & Home provides an unbiased comparison shopping platform for auto, home, and specialty insurance lines.

William “Tom” Grant II has served as a director of SelectQuote since 2010 and as the Vice Chairman of the Board since 2017, following his time as the Company’s President from 2015 to 2017. Mr. Grant served as the Senior Vice President of Health and Risk Management at Quest Diagnostics Incorporated from 2005 to 2007 and as the Chairman, President, and CEO of LabOne, Inc. from 1995-2005. Before that, he was at Seafield Capital Corporation, where he served as the Chairman of Board and CEO from 1993 to 1995 and as the President and CEO from 1990 to 1993. Mr. Grant also served as President and CEO of Business Men’s Assurance Company of America from 1986 to 1990.

Opinion:  Select Quote is the kind of roller coast ride we try to avoid. The stock lost 50% of its value in one day last week and has now regained about half of that. Online insurance aka Fintech has been a tough playground.  Look at HIPPO, Lemonade, and Select Quote to see what I mean.  It’s all the more confusing when I tell you it’s time to buy Bright Health Group, BHG.

Name: Kadre Manuel
Position: Director
Transaction Date: 2021-09-08 Shares Bought: 100,000 Average Price Paid: $9.59 Cost: $959,000
Company: Bright Health Group Inc. (BHG)
The Bright Health Group Inc company was founded by Bob Sheehy, the former CEO of UnitedHealthcare, with partners Kyle Rolfing, Tom Valdivia, and seed investor Flare Capital Partners, upon raising $81.5 million in venture capital in 2016. The company said it would focus on “consumer-centric” technology, facilitating patient experiences through digital interfaces. Bright Health is based in Minneapolis. It first began offering plans in the State of Colorado in a partnership with Centura Health after several large insurers announced they would be pulling out of the state. Their mission of Making healthcare right. Together. It is built upon the belief that by connecting and aligning the best local resources in healthcare delivery with the financing of care, they can drive a superior consumer experience, reduce systemic waste, lower costs, and optimize clinical outcomes. At its core, Bright Health is a healthcare company. They are founded and led by industry veterans all too familiar with the challenges that have plagued U.S. healthcare for decades. They believe that to drive meaningful change, they must leverage technology and bring together the financing and delivery of care to strengthen healthcare’s most critical relationship: that between the consumer and their primary care physician. For too long, U.S. healthcare, primarily designed to cater to employers and large institutions, has failed the consumer through unnecessary complexity, a lack of transparency, and skyrocketing costs. They are making healthcare simple, personal, and affordable.

Manuel Kadre is the Independent Chairman of the Board of Republic Services Inc. Mr. Kadre has been Chief Executive Officer of MBB Auto, LLC, since 2012. He served as Chief Executive Officer of Gold Coast Caribbean Importers, from 2005 to 2014. He was President, Vice President, General Counsel, and Secretary of CC1 Companies, (1995 – 2009). He has served as Lead Independent Director at Mednax, Inc., since 2007. He is the Director of The Home Depot, Inc., since 2018. He is on the Board of Trustees.

Opinion: Several insiders are buying. The company is a busted IPO haven fallen almost every day since going public in a reduced offering back at the end of June. It looks like selling climaxed on August 4th with a 24% drop and a capitulation puke of many times normal volume. Since then insiders have been loading up and so are we.  The company had a messy first quarter as a public company with a higher than expected medical loss ratio and unexpected revenue income gain. Somewhere in there, investors forgot to look at the 160% organic revenue growth. It will be a painful ascent back to the IPO price of $18 but disgruntled shareholders may have mostly exited on the previously mentioned capitulation sell-off. We like the setup here and are buyers.

Name: Campbell Robert J
Position: Director
Transaction Date: 2021-09-03 Shares Bought: 2,000 Average Price Paid: $223.88 Cost: $447,760
Company: Enstar Group LTD. (ESGR)
Enstar is a leading global insurance group that delivers innovative insurance solutions through its network of group companies. Spanning a 27+ year history of operating in the run-off space, they leverage their ability to thoroughly understand risks and liabilities to create ideal legacy solutions for their partners. Their analytical approach benefits their partners seeking optimal capital deployment solutions crafted to meet their risk profiles. They complement their core claims management business with several high-quality strategic investments. Founded in Bermuda in 1993, Enstar was created through acquisitions to become, by 2013, the industry’s largest stand-alone run-off consolidator. Later in 2013, they diversified into live risk by investing in leading specialty insurance companies in global markets, including Lloyd’s. In 2020, as part of their strategy to focus on their core legacy competency, they announced transactions – alongside trusted partners – at their live underwriting operations, StarStone and Atrium, which retain their investments in these high-quality companies through meaningful minority stake. Enstar has the vision and appetite to grow further. Enstar leverages its expertise in claims management, risk analysis, and investment to generate value. These services make Enstar different, something unique.  Enstar is publicly traded on the NASDAQ stock market (ticker symbol: ESGR).

Robert J. Campbell has been a director of the Company since August 2007 and was appointed as the independent Chairman of the Board in 2011. He has been a Partner with the investment advisory firm of Beck, Mack & Oliver, LLC since 1990. He is also a non-employee Director of AgroFresh Solutions, Inc., a publicly-traded global agricultural technologies company, and Boulevard Acquisition Corp. II.

Opinion:  There is all kinds of pin action in the insurance sector in the last two weeks, both fintech and traditional insurance companies. I can’t put the pieces together. It looks like coincidence more than confidence amongst the buyers. Campbell at this time looks like a Director taking advantage of a 10% pullback in a company that he knows something about.  I don’t see any other catalyst so we are passing on this.

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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.  One other information source that I find indispensable is.The Fly on the Wall. 

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