Insider Buying week 02-25-22 Yes, there is now Blood on the Streets

Curious how well insiders are doing with their buys? Scroll the significant buys of the last year.

Figuring out the next move in the market has moved into the realms of multidimensional chess playing with cross-currents upon cross-currents swirling below one another, colliding into one another. Just look at the Fed’s dilemma now trying to tighten monetary policy in the face of a potential global conflict.   Putin has unleashed his single-handed insane determination to change the world order. No one knows where this goes and how it ends. Ultimately this war could trump all news but for now, the market is believing the West will lose a pawn and Putin will lose face.  That could be very wrong as the heroic people of Ukraine might shame Europe and the US into a much bigger confrontation.  This is the most pivotal moment in history since the Cuban Missle Crisis- and it’s just getting started.

Before the macro Russian bear theme enveloped the market, we had a predictable scenario where overpriced, over-hyped for the most part nonprofitable companies were bid up into stratospheric valuations. The great unwinding had begun and the Fed tightening seemed to be the match that ignited the inevitable tinderbox.  You could short away as many stocks are now down 50-80% from their peaks, and most are still falling. The major indexes finally started to roll over as even the top-weighted companies are not immune to this downside move. What was once stealth has now come to the forefront.  We are in a full-fledged bear market.  How do I know this? It’s simple. When you lose money on every long and make money on all the shorts. It’s obvious.

Like any setup, when the preponderance of traders on one side of the trade you can expect monstrous reversal moves like the 238 point S&P futures move on the evening of 2-24 closing on Friday afternoon.  To put that into better perspective that’s a 1900 point Dow move.

As expected insiders were stepping up their buying but buying into a major war might put a damper on the animal spirits. The bottom line is we are in a full-blown bear market with a war that has the potential to go global and out of control.  Who can invest money in this kind of market?  That’s simple.  Long-term investors and the longest-term professional investors are private equity.  They’ve raised giant sums of money and will be putting it to work as they don’t have to answer to investors for years.

SHW has taken a hit, down $87 since the start of the year. The rise in interest rates and margin pressure are all factors that might be contributory to the 32% drop in price.  By all measures, housing demand is strong, and although there are certainly inflationary pressures, SHW will eventually catch up with the supply chain issues. and margins will stabilize.

They said they delivered full-year sales growth of 8.6%, driven by 6% U.S. and Canada same-store sales growth and double-digit growth in all industrial end markets. That doesn’t sound bad at all.  On the surface, this looks like a buying opportunity and the CFO is usually a good value buyer.  So what is Sherwin Williams worth?

Our DCF analysis is $175.26, P.E. TTM 38.40, P/CF 39.0, P/FCF 37.7  Sherwin Williams is still way overpriced and likely to head lower in a weakening housing market

Name: Stephens Kevin A
Position: Director
Transaction Date: 2022-02-22 Shares Bought: 2,000 Average Price Paid: $162.30 Cost: $324,600
Company: Crown Castle International Corp. (CCI)
Since 1994, Crown Castle has worked around the country to build and maintain the infrastructure behind the world’s most revolutionary technologies. This comprehensive portfolio of towers, small cells, and fiber gives people and communities access to essential data, technology, and wireless service and opens the door to countless opportunities and possibilities. We continue to work closely with wireless carriers, businesses, technology companies, governments, and communities to make sure these transformative ideas and innovations find their way to those who rely on them. Crown Castle owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every primary U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service – bringing information, ideas, and innovations to the people and businesses that need them.

Mr. Stephens most recently served as Executive Vice President and President, Business Services for Altice USA. In that role, he was responsible for $1.4 billion in annual revenue, providing high-speed data connectivity and cloud services to enterprise, wholesale, and small and medium business customers. Before his role with Altice, Mr. Stephens served as President, of Commercial and Advertising Operations at Suddenlink Communications. Mr. Stephens previously held senior leadership positions at Fortune 500 and start-up firms, including Cox Communications, Choice One Communications, and Xerox Corporation, where he started his career.

Opinion: Crown Castle peaked out at $210.  While some analysts were touting its fortunes others were starting to downgrade the giant cellular tower play. Jefferies analyst Jonathan Petersen downgraded Crown Castle to Hold from Buy with a price target of $203, down from $226, citing high valuation, rising interest rates, and ongoing Sprint churn that he sees weighing on growth. Tower REITs have historically underperformed the market during periods of rising interest rates and he expects similar behavior from the stocks going into 2022, Petersen tells investors.

The stock is at $162.30.  Small cells, Sprint churn, rising rates- none of that adequately explains the draconian loss in value. This is Stephens’s fourth purchase since February 2021. Crown Castle is a REIT yielding 3.51% which is not bad for an industry with growth rates well in excess of both the long bond rate and the industry growth rate. CCI is selling off in my opinion because of the misplaced fear that interest rates will rise far in excess of what current indicators are showing. We won’t get rich with this name and at this price but we won’t get hurt either.

Name: Palandjian Tracy P
Position: Director
Transaction Date: 2022-02-22 Shares Bought: 3,700 Average Price Paid: $137.67 Cost: $509,379
Company: Affiliated Managers Group Inc. (AMG)
Affiliated Managers Group, Inc. is an American international investment management company headquartered in West Palm Beach, Florida. that owns stakes in several boutique asset management, hedge fund, and specialized private equity firms. Through its affiliates, affiliated Managers Group, Inc. operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or sub-advisory services to mutual funds. These funds are distributed to retail and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large-capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products and manages assets for foundations and endowments, defined benefits, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. The company was formed as a corporation under the laws of Delaware in 1993. Affiliated Managers Group is based in Prides Crossing, Massachusetts. They identify and partner with investment firms around the world specializing in actively-managed investment strategies. The AMG Partnership Approach preserves each Affiliate’s essential elements of success, including operational and investment autonomy and direct equity ownership across successive generations of management, and provides access to the scale and resources of a global asset management firm.

Tracy P. Palandjian has been a director of the Company since March 2012. Ms. Palandjian is the Chief Executive Officer, co-founder, and a member of the Board of Directors of Social Finance, Inc., a nonprofit organization focused on developing and managing investments that generate social impact and financial return. Prior to establishing Social Finance, Ms. Palandjian served as a Managing Director at The Parthenon Group, a global strategy consulting firm. At Parthenon, she established and led the Nonprofit Practice and consulted foundations and nonprofit organizations on strategy development, mission definition, corporate social responsibility, and knowledge and innovation in the U.S. and globally. Prior to Parthenon, Ms. Palandjian worked at McKinsey & Company and at Wellington Management Company, LLP. Ms. Palandjian is currently Vice-Chair of the United States Impact Investing Alliance and the Global Social Impact Investment Steering Group (successor to the G8 Social Impact Investment Taskforce). She serves on the Boards of Pershing Square Holdings, Ltd., The Boston Foundation, and the Surdna Foundation (and chairs its Investment Committee).

Opinion: Buy. Conventional wisdom is that this is a stock pickers market. AMG is a group of stock pickers. The Directors of the Company think AMG is a good buy and they are voting with their dollars.

Name: Yeary Frank D
Position: Director
Transaction Date: 2022-02-18 Shares Bought: 4,500 Average Price Paid: $103.96 Cost: $467,834
Company: PayPal Holdings Inc. (PYPL)
PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers and serves as an electronic alternative to traditional paper methods such as checks and money orders. The company operates as a payment processor for online vendors, auction sites, and many other commercial users, for which it charges a fee. The Company’s combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom, iZettle, and Hyperwallet products and services, comprise its Payments Platform. It operates a two-sided network that links its customers around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. The Company allows its customers to use their account for both purchases and paying for goods, as well as to transfer and withdraw funds. It enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card, or other stored value products. The Company also offers consumers person-to-person (P2P) payment solutions through its PayPal Website and mobile application, Venmo, and Xoom.

Frank D. Yeary has served as a director of PayPal since July 2015. He previously served as a board member of eBay from January 2015 to July 2015. Mr. Yeary is Manager at Darwin Capital Advisors, LLC, a private investment firm, and was the former Executive Chairman of CamberView Partners, LLC, a corporate advisory firm, until 2018. Prior to this Mr. Yeary was Vice-Chancellor of the University of California, Berkeley and spent 25 years in the finance industry, most recently as Managing Director, Global Head of Mergers and Acquisitions, and a member of the Management Committee at Citigroup Investment Banking, a financial services company. Mr. Yeary also serves on the Board of Directors of Intel Corporation. Mr. Yeary received his B.A. in History and Economics from the University of California, Berkeley.

Opinion: At some point, price determines everything. Paypal will be a good buy at some point but I don’t see the intrinsic value of Paypal. Divorced from eBay, it filled a vacuum left by Visa quickly filling out voids in the payment system but at the end of the day, does Paypal do anything that Visa can’t do? Does it do anything cheaper than Visa? The only useful and unique function I see is Venmo which is limited to U.S. customers and from what I understand is not a very profitable business although a unique one. I think a digital wallet is a shallow moat business. Everyone from Wells Fargo to Apple seems to be in the digital wallet business now that the curtain has been lifted.

Name: Hambleton Howard F
Position: President
Transaction Date: 2022-02-22 Shares Bought: 13,187 Average Price Paid: $75.82 Cost: $999,900
Company: FirstCash Holdings Inc. (FCFS)
FirstCash Holdings, Inc. is an operator of pawn stores, which helps customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers. The Company operates through its subsidiary, FirstCash, Inc. Its two segments are The United States operations and Latin America operations. The Company’s stores make pawn loans, which are typically small, secured loans, to its customers in order to help them meet instant cash needs. All pawn loans are collateralized by personal property such as jewelry, electronics, tools, appliances, sporting goods, and musical instruments. Its pawn merchandise sales are primarily retail sales to the general public from its pawn store locations. The items sold generally consist of pre-owned consumer products such as jewelry, electronics, tools, appliances, sporting goods, and musical instruments. It also melts certain quantities of non-retail-able scrap jewelry and sells gold, silver, and diamonds.

Howard Hambleton is the President of American First Finance, a Leading Technology-Driven Virtual Lease-to-Own and Retail Finance Platform for Underserved Customers. First Cash announced a $1.17 billion stock and cash transaction to acquire American First Finance. The $1.17 Billion Stock and Cash Transaction Expected to be Significantly Accretive to EBITDA and EPS.

Opinion: It’s not clear how much Hambleton receives from this transaction but it can be safely assumed it makes his $1,000,000 investment into the newly formed subsidiary a riskless transaction.  With all the carnage in the world and in the market, this is not something I would look at.

Name: Larsen Michael M
Position: Director
Transaction Date: 2022-02-22 Shares Bought: 3,925 Average Price Paid: $69.87 Cost: $274,240
Company: Smith A. O. Corporation (AOS)
A. O. Smith Corporation is one of the world’s leading manufacturers of residential and commercial water heaters and boilers, offering a comprehensive product line featuring the best-known brands in North America, China, and India. The company was founded in 1874 in Milwaukee, Wisconsin where today the company is headquartered. A. O. Smith employs approximately 16,100 men and women at operations in the United States, Canada, Mexico, China, India, the United Kingdom, the Netherlands, and Turkey, which has the global reach to serve customers worldwide. The company also has sales and distribution in more than 60 countries around the world. As a global leader A., O. Smith and its employees pride themselves on applying innovative technology and energy-efficient solutions to products marketed worldwide. The company’s goal is to be a leading global water technology company, and the focus is on building this platform through new product development, global expansion, strategic acquisitions, and partnerships. As the company’s history timeline illustrates, A. O. Smith’s history is one of finding creative ways to solve customer problems and make them more successful. It also is a history of achievement – the innumerable contributions of the men and women who make up the company. By following the credo of Integrity, Innovation, and Customer Satisfaction, A. O. Smith’s employees will ensure the company’s prosperity and success for another 145 years.

Mr. Larsen joined the A. O. Smith Board of Directors on April 13, 2021, and is a member of the Audit Committee. Since 2013, Mr. Larsen has served as Senior Vice President and Chief Financial Officer of Illinois Tool Works, Inc., a publicly-traded, global, multi-industrial manufacturing leader. He previously served as President and Chief Executive Officer of Gardner Denver, Inc. from 2012 to 2013, and it’s Vice President and Chief Financial Officer from 2010 to 2013. Prior to that, Mr. Larsen was Chief Financial Officer at General Electric (“GE”) Water and Process Technologies from 2009 to 2010 and held a number of global finance leadership roles of increasing responsibility at GE from 1995 to 2009.

Opinion: There should be an obvious pattern by now. Many charts look the same. Like I said in the opening paragraphs, we are clearly in a bear market. Is AOS free cash flow positive? Does it have an unassailable franchise? Is the balance sheet able to be leveraged? Does it have brand recognition?  These are all things private equity is interested in. I don’t believe there are any natural buyers for equities other than private equity with the patience to wait it out. Passive index funds just reflect the psychological mood swings of the investing public and institutions and have no real conviction.  There is no buying because the market reflects good value. It’s strictly fear and greed, mostly uninformed, both ignorant and more important, oblivious to value.

AOS based on our calculations has $103.86, P.E 22.98, P/CF 26.71, P/FCF 19.63. Although AOS has certainly gotten more interesting, its not a compelling enough valuation for me to invest for now.

Name: Cohler Matt
Position: Director
Transaction Date: 2022-02-24 Shares Bought: 8,683 Average Price Paid: $58.26 Cost: $505,908
Company: KKR & Co. Inc. (KKR)
Kohlberg Kravis Roberts is a global investment business that manages a variety of alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and hedge funds, which it manages through strategic partners. Through a diligent and disciplined investing approach, employing world-class people, and driving growth and value creation with KKR portfolio companies, the company creates strong investment returns for its fund investors. Through its capital markets operation, the corporation invests its own money alongside the money it manages for fund investors and provides financing and investment options. As of June 30, 2017, the company had executed more than 280 private equity investments in portfolio companies with a total enterprise value of $545 billion. As of September 30, 2017, Assets Under Management (“AUM”) and Fee Paying Assets Under Management (“FPAUM”) were $153 billion and $114 billion, respectively. The company was created by Jerome Kohlberg, Jr., Henry Kravis, and George R. Roberts, all of whom had previously worked together at Bear Stearns, where the three completed several of the leveraged buyout operations. Kohlberg Kravis Roberts has conducted a number of transactions, including the 1989 leveraged buyout of RJR Nabisco, which was the largest buyout in history at the time, and the 2007 acquisition of TXU, which is the firm’s largest buyout to date.

Matt Cohler is a former General Partner at Benchmark Ventures, where he oversaw early-stage investments in Internet and software startups for over a decade. He is currently a director and member of the Asana nominating and governance committee, a director and member of the 1stdibs audit committee, and a director of many privately owned firms. He previously worked at Domo as a director, member of the audit committee, and member of the nominating and governance committee, as well as at Uber as a director and member of the audit committee, and as a director at privately owned firms such as Duo Security, Instagram, and Tinder. Matt was formerly Vice President at Facebook, where he was the company’s seventh employee, and Vice President at LinkedIn, where he was part of the company’s founding team. He serves on the board of trustees at Environmental Defense Fund (Vice Chair), on the board of governors at the San Francisco Symphony (Vice President) and on the investment committee at the Chan Zuckerberg Initiative and at the Yale Investments Office.

Opinion:

Name: Clark Yvette Hollingsworth
Position: Director
Transaction Date: 2022-02-23 Shares Bought: 6,700 Average Price Paid: $45.24 Cost: $303,130
Company: Air Lease Corp (AL)
Launched in 2010, Air Lease Corporation (ALC) is an aircraft leasing company based in Los Angeles, California that has airline customers throughout the world. ALC and its team of dedicated and experienced professionals are principally engaged in purchasing commercial aircraft and leasing them to its airline partners worldwide through customized aircraft leasing and financing solutions. Air Lease Corporation is an aircraft leasing company. The Company is engaged in purchasing new commercial jet aircraft directly from manufacturers, such as The Boeing Company (Boeing) and Airbus S.A.S (Airbus), and leases these aircraft to airlines throughout the world with the intention to generate returns on equity. In addition to its leasing activities, it sells aircraft from its operating lease portfolio to third parties, including other leasing companies, financial services companies, airlines, and other investors. The Company also provides fleet management services to investors and owners of aircraft portfolios for a management fee. The Company owns a fleet of approximately 354 aircraft in its operating lease portfolio, manages approximately 89 aircraft and has 338 aircraft on order with aircraft manufacturers and approximately 24 aircraft purchase options.

Ms. Hollingsworth Clark is currently President & CEO of Hollingsworth Compliance Consulting LLC, a risk management and compliance advisory firm. Prior to establishing her consulting practice, Ms. Hollingsworth Clark held global leadership roles in financial services, most recently as Executive Vice President & Regulatory Innovation Officer with Wells Fargo & Company and previously as Managing Director & Global Head of Financial Crimes & Operations Compliance for Barclays Capital Corporate & Investment Bank and Managing Director, North America Regional Head of Anti-Money Laundering at Citigroup. Before her private sector roles, Ms. Hollingsworth Clark was a bank regulator with the Federal Reserve System for about ten years. Ms. Hollingsworth Clark serves on the boards of Golden Gate University and the International Women’s Forum Northern California. Additionally, she serves as an Advisory Council Member for the Alliance for Innovative Regulation and is a member of the Executive Leadership Council. Ms. Clark holds a BS in Finance from State University of New York Polytechnic Institute and an MBA in Finance from Syracuse University, School of Management.

Opinion: Hollingworth was appointed to the Board in May of 2021. At this time it just looks like a mandatory type directorship quid pro quo buy.

Name: Kamin Peter
Position: Director
Transaction Date: 2022-02-17 Shares Bought: 142,100 Average Price Paid: $35.56 Cost: $5,053,381
Company: IAA Inc (IAA)
KAR Auction Services Inc. (NYSE: KAR), a global automotive remarketing and technology services provider, announced in 2018 that it successfully completed its previously announced separation of IAA, Inc. (“IAA”). IAA is now an independent public company, trading on the New York Stock Exchange under the ticker symbol “IAA.” IAA, Inc. is a digital marketplace connecting vehicle buyers and sellers. The Company operates through two segments: the United States and International. Its platform facilitates the marketing and sale of total loss, damaged and low-value vehicles for a spectrum of sellers. It serves a buyer base and a spectrum of sellers, including insurance companies, dealerships, fleet leases, rental car companies, and charitable organizations. Its solutions provide buyers with the vehicles they need to, among other things, fulfill their vehicle rebuild requirements, replacement part inventory, or scrap demand. It provides buyers with multiple bidding/buying digital channels, vehicle merchandising, evaluation services, and online bidding tools, for the overall purchasing experience. It has approximately 200 facilities throughout the United States, Canada, and the United Kingdom. Headquartered near Chicago in Westchester, Illinois, IAA has nearly 4,000 employees and more than 200 facilities throughout the U.S., Canada, and the United Kingdom. IAA serves a global buyer base – located throughout over 170 countries – and a full spectrum of sellers, including insurers, dealerships, fleet leases, rental car companies, and charitable organizations. Buyers have access to multiple digital bidding and buying channels, innovative vehicle merchandising, and efficient evaluation services, enhancing the overall purchasing experience. IAA offers sellers a comprehensive suite of services aimed at maximizing vehicle value, reducing administrative costs, shortening selling cycle time, and delivering the highest economic returns.

Kamin Peter Founder of Peak Investment LP, ValueAct Capital Management LP, ValueAct Capital Management LLC, and 3K LP, Peter H. Kamin is an entrepreneur and businessperson who has been at the helm of 5 different companies and currently occupies the position of Chairman for Calloway’s Nursery, Inc., Chairman at Tile Shop Holdings, Inc. and Chairman of Rand Worldwide, Inc. Peter H. Kamin is also Director & Managing Partner at 3K LP and on the board of 8 other companies.

Opinion: Truist analyst Stephanie Moore lowered the firm’s price target on IAA to $50 from $75 but keeps a Buy rating on the shares. The company reported a Q4 EBITDA miss and offered “mixed” FY22 guidance on EBITDA margin, but the subsequent 22% stock price decline is “overdone”, the analyst tells investors in a research note. Moore adds that IAA is now trading at 11-times expected 2022-2023 EBITDA – its lowest valuation level ever.

I was trying to find something connecting Carvana’s announcement that it was buying KAR’s auction business as partial justification for the collapse in stock price but for now, it’s too very different markets. Carvana is buying KAR’s wholesale auction business so it can beef up its source of used vehicles and compete directly with the dealer network. It might make the US auto dealership network think twice about selling their used cars to KAR now that it is feeding directly a  real competitor, Carvana. On the other hand, IAA is dealing with the salvage market and is not really competing with Carvana.

Some thoughts from the earnings call, Moderating used car prices will provide for a more positive total write-off environment. HIgh used car prices were keeping insurance companies from as many total writeoffs. They were hit with substantial towing cost inflation. TOWING this is what they are blaming the collapse in margins on. It doesn’t sound like Wall Street is swallowing the towing excuse. They have two years left on a non-compete. All in all, this looks cheap but is too complicated for me. I think there are just going to be many more compelling opportunities and I want to keep some powder dry.

Name: Cummins Wesley
Position: Director
Transaction Date: 2022-02-18 Shares Bought: 30,000 Average Price Paid: $32.26 Cost: $967,650
Company: Vishay Precision Group Inc. (VPG)
Vishay Precision Group, Inc. designs, manufactures, and markets sensors, sensor-based measurement systems, specialty resistors, and strain gages in the United States, Israel, the United Kingdom, rest of Europe, Asia, and Canada. It operates through three segments: Foil Technology Products, Force Sensors, and Weighing and Control Systems. The company’s product portfolio includes foil resistors, foil strain gages, transducers, load cells, modules, data acquisition systems, and weighing and control systems, as well as sensors that convert mechanical inputs into an electronic signal for display, processing, interpretation, or control by its instrumentation and system products. Its products are primarily used in the military and aerospace, medical, agricultural, steel, and construction sectors for application in waste management, bulk hauling, logging, scales manufacturing, engineering systems, pharmaceutical, oil, chemical, paper, and food industries. The company offers its products under the Vishay Foil Resistors, Alpha Electronics, Powertron, Pacific Instruments, Micro-Measurements, Celtron, Revere, Sensortronics, Tedea-Huntleigh, BLH Nobel, KELK, GleebleVPG Onboard Weighing brands. Vishay Precision Group, Inc. sells its products through field application engineers. Vishay Precision Group, Inc. was incorporated in 2009 and is headquartered in Malvern, Pennsylvania.

Mr. Wesley C. Cummins is an Independent Director at Sequans Communications SA, an Independent Director at Vishay Precision Group, Inc., a Chairman & Chief Executive Officer at Applied Science Products, Inc., and a Founder & Chief Investment Officer at 272 Capital LP. He is on the Board of Directors at Sequans Communications SA and Vishay Precision Group, Inc. Mr. Cummins was previously employed as an Independent Director by TeleNav, Inc., a Research Analyst by Nokomis Capital LLC, an Analyst by Harvey Partners LLC, a Research Director & Head-Capital Markets by B. Riley & Co. LLC, a President by Riley Investment Management LLC, an Analyst by Needham & Co., Inc., and an Analyst by Kennedy Capital Management, Inc.

Opinion: I have to give Cummins credit for his conviction. He had big profits in VPG but rather than cash out on these, he’s doubled down as the stock price has plummeted.  Was that the correct position? As a fund manager, I would have taken a lot of blame for riding this stock down so much. I’ve yet to get religious about Vishay although the industrial sector is definitely going to benefit from domesticating and moving supply chains to friendlier destinations. I still would prefer to see VPG get fundamentally undervalued which it is not and then work with a potentially positive scenario.

Name: William Mulligan C
Position: Director
Transaction Date: 2022-02-22 Shares Bought: 6,500 Average Price Paid: $31.84 Cost: $206,991
Company: Universal Electronics Inc (UEIC)
Universal Electronics Inc. is engaged in the business of wireless universal control solutions for home entertainment and smart home devices. The Company designs, develops, manufactures, ships, and supports control and sensor technology solutions. The Company offers universal control systems, audio-video accessories, intelligent wireless security, and smart home products. The Company’s products and solutions include video services, consumer electronics, security, home automation, climate control, and home appliance markets. The Company distributes remote control devices, integrated circuits, sensors, connected thermostats, and audio-video (AV) accessories directly to video and security service providers and original equipment manufacturers (OEMs), both domestically and internationally. It also distributes home security sensors and connected thermostats to pro-security installers and hospitality system integrators in the United States and Europe. Universal Electronics Inc. designs, develops, manufactures, and sells pre-programmed and universal control products, audio-video accessories, intelligent wireless security, and smart home products for consumer electronics, subscription broadcasting, security, home automation, hospitality, and climate control markets. The company offers universal radio frequency (RF) and infrared remote controls; integrated circuits on which its software and universal device control database is embedded; and software, firmware, and technology solutions that enable devices, such as televisions, set-top boxes, audio systems, smart speakers, game controllers, and smart home and other consumer electronic devices to wirelessly connect and interact with home networks, as well as interactive services to control and deliver home entertainment, smart home services, and device or system information. It also provides proprietary and standards-based RF sensors designed for residential security, safety, and automation applications; wall-mount and handheld thermostat controllers, connected accessories for intelligent energy management systems; and AV accessories. In addition, the company licenses intellectual property comprising its patented technologies, and database of control codes. The company serves service providers, original equipment manufacturers, retailers, private label brands, as well as to distributors, and dealers. It sells its products under the One For All brand in the United States, the United Kingdom, the People’s Republic of China, the rest of Asia, Europe, Latin America, and internationally.

William C. Mulligan serves as Independent Director of the Company. Mr. Mulligan has over 30 years of experience in private equity, having joined Primus Capital Funds in 1985 from McKinsey & Company, Inc. Mr. Mulligan has served as a Managing Director of Primus since 1987. Mr. Mulligan serves as director of several private companies and TFS Financial Corporation (Nasdaq: TFSL). Mr. Mulligan serves on the audit (chairman), compensation, and executive committees of TFS. Mr. Mulligan is also a trustee of The Cleveland Clinic Foundation, Denison University, and the Land Trust Alliance. Mr. Mulligan earned a Bachelor of Arts in economics from Denison University and an MBA from the University of Chicago. Mr. Mulligan has served as a member of our Board of Directors since 1992. He also serves as Chairman of our Corporate Governance and Nominating Committee and as a member of our Audit Committee.

Opinion:

Name: Riney Stephen J
Position: CFO
Transaction Date: 2022-02-22 Shares Bought: 6,300 Average Price Paid: $31.47 Cost: $198,258
Company: APA Inc (APA)
APA Corporation’s companies operate in the United States, Egypt’s Western Desert, the United Kingdom’s North Sea, and offshore Suriname, with exploration potential. The beliefs, commitment to producing shareholder value, and culture, which empowers every employee to make decisions and achieve the company’s goals, have brought our team together since 1954. A sense of ownership and the awareness that the best responses win bring our worldwide team together. We aim to maximize shareholder returns while also assisting in the fulfillment of global energy needs and establishing novel, more sustainable business models. In areas of operation, we strive to be a community partner, focusing on the safety and health of our employees, communities, and the environment. In 2021, Apache Corporation moved to a holding company structure under APA Corporation, the public company trading on the Nasdaq stock exchange. APA acquired the Suriname and Dominican Republic subsidiaries from Apache. Apache Corporation is a direct, wholly-owned subsidiary of APA and continues to hold assets in the U.S., subsidiaries in Egypt and the U.K., and economic interests in Altus Midstream Company and Altus Midstream LP.

Presently, Stephen J. Riney occupies the position of Chief Financial Officer & Executive Vice President at APA Corp. and Chief Financial Officer & Executive Vice President of Apache Corp. (a subsidiary of APA Corp.). He previously occupied the position of Head-Mergers & Acquisitions at BP Plc and Chief Financial Officer of BP Exploration & Production, Inc. (a subsidiary of BP Plc). Stephen J. Riney received an MBA from The University of Chicago Booth School of Business and an undergraduate degree from the University of Notre Dame. Prior to joining the company, he served as chief financial officer for BP Exploration and Production from July 2012 to January 2015, and global head of mergers and acquisitions for BP plc from January 2007 to June 2012.

Opinion: Nominal director buy. I would not read anything into this other than a mandatory corporate ownership program.

Name: Massey Richard N
Position: CEO
Transaction Date: 2022-02-22 Shares Bought: 10,000 Average Price Paid: $26.40 Cost: $264,000
Company: Cannae Holdings, Inc (CNNE)
Annae Holdings, Inc. (NYSE: CNNE), founded and led by Chairman, William P. Foley, II (“Bill Foley”), is engaged in actively managing and operating a group of companies and investments, as well as making additional majority and minority equity portfolio investments in businesses. They believe our operating structure provides the investors with a compelling opportunity to participate in the acquisition and growth of businesses led by a world-class management team. The investment strategy includes taking meaningful equity ownership stakes where they have an ability to control or significantly influence quality companies that are well-positioned in their respective industries and operate in industries with attractive organic and acquired growth prospects. This enables Cannae to achieve superior financial performance, maximize and ultimately monetize the value of those assets, and continue to pursue similar investments in businesses. Cannae has a proven track record of growing industry-leading companies and are active interacts with and supports management of the portfolio companies to ultimately provide value for the shareholders. Bill Foley-led management teams are responsible for the growth of publicly traded companies such as Fidelity National Financial (NYSE: FNF), Black Knight, Inc. (NYSE: BKI), Ceridian HCM Holdings, Inc. (NYSE: CDAY), Dun & Bradstreet Holdings, Inc. (NYSE: DNB), which recently completed a successful business transformation and IPO, and Fidelity National Information Services (NYSE: FIS), which collectively had a market capitalization of approximately $139 billion as of December 31, 2020.

Richard Massey serves as the Chief Executive Officer of Cannae Holdings, Inc. and on the Cannae Holdings board of directors. Most recently Mr. Massey was a partner of Westrock Capital Partners and Bear State Advisors, both multifamily investment offices. Mr. Massey was Chief Strategy Officer and General Counsel of Alltel Corporation from January 2006 to January 2009, the fifth-largest wireless carrier in the United States, before being sold for approximately $29 billion in 2009. Previously, from 2000 until 2006, Mr. Massey served as Managing Director of Stephens Inc., a private investment bank, during which time his financial advisory practice focused on software and information technology companies. Mr. Massey also serves as a director of the Dun & Bradstreet Corporation, and Alight, Inc., which are Cannae portfolio companies. Mr. Massey formerly served as a director of Fidelity National Financial, Inc., Black Knight, Inc., Fidelity National Information Systems, and FGL Holdings. He is also a director of the Oxford American Literary Project and Chairman of the Board of the Arkansas Razorback Foundation.

Opinion: I’m sure they are having a field day with prices coming down on many targets. I’m just singularly unimpressed with Black Knight, Dun & Bradstreet.

Name: Rutherford John R
Position: Director
Transaction Date: 2022-02-028 Shares Bought: 15,000 Average Price Paid: $23.76 Cost: $356,415
Company: Enterprise Products Partners L.P. (EPD)
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. The NGL Pipelines & Services segment offers natural gas processing and related NGL marketing services. It operates 21 natural gas processing facilities in Colorado, Louisiana, Mississippi, New Mexico, Texas, and Wyoming; NGL pipelines; NGL fractionation facilities; NGL and related product storage facilities; and NGL marine terminals. The Crude Oil Pipelines & Services segment operates crude oil pipelines; and crude oil storage and marine terminals, including a fleet of 310 tractor-trailer tank trucks used to transport liquefied petroleum gas. It also engages in crude oil marketing activities. The Natural Gas Pipelines & Services segment operates natural gas pipeline systems to gather, treat, and transport natural gas. It leases underground salt dome natural gas storage facilities in Napoleonville, Louisiana; owns an underground salt dome storage cavern in Wharton County, Texas; and markets natural gas. The Petrochemical & Refined Products Services segment operates propylene fractionation and related marketing activities; butane isomerization complex and related deisobutanizer units; and octane enhancement and high purity isobutylene production facilities. It also operates refined products pipelines and terminals; and ethylene export terminals, and provides refined products marketing and marine transportation services. The company was founded in 1968 and is headquartered in Houston, Texas.

Mr. Rutherford was elected as a director of Enterprise GP in January 2019 and is a member of its Audit and Conflicts Committee. He is a Senior Managing Director of NRI Energy Partners LLC. This firm evaluates and invests in private and public energy companies and provides financial and strategic consulting services to energy companies and investment firms. His career includes over 20 years of investment banking experience as mergers and acquisitions and strategic advisor to public and private energy companies, investment firms, management teams, and boards of directors. Before joining Plains, Mr. Rutherford served as Managing Director of the North American Energy Practice of Lazard Freres & Company from 2007 until 2010.

Opinion: We are a buyer. If nothing else the Ukrainian Russian conflict should show us just how naive we are to think we are close to weaning off hydrocarbons. If anything we will be investing far more heavily to help our European allies transition to American sources of energy than being held hostage to the Russians. Buy aggressively. There have been many insider buys and pays a very large yield.

Name: Sloan Harry
Position: Director
Transaction Date: 2022-02-23 Shares Bought: 40,000 Average Price Paid: $20.05 Cost: $802,000
Company: DraftKings Inc. (DKNG)
DraftKings Inc. is a digital sports entertainment and gaming company created to fuel the competitive spirit of sports fans with products that range across daily fantasy, regulated gaming, and digital media. Headquartered in Boston, and launched in 2012 by Jason Robins, Matt Kalish and Paul Liberman, DraftKings is the only U.S.-based vertically integrated sports betting operator. DraftKings is a multi-channel provider of sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. DraftKings’ Sportsbook is live with mobile and/or retail betting operations in the United States pursuant to regulations in Arizona, Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Tennessee, Virginia, West Virginia, and Wyoming. DraftKings’ daily fantasy sports product is available in 7 countries internationally with 15 distinct sports categories. DraftKings is the official daily fantasy partner of the NFL, MLB, NASCAR, PGA TOUR and UFC as well as an authorized gaming operator of the NBA and MLB, an official sports betting partner of the NFL, an official betting operator of PGA TOUR, and the official betting operator of UFC. Launched in August 2021, DraftKings Marketplace is a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions. DraftKings also owns Vegas Sports Information Network, Inc. (VSiN), a multi-platform broadcast and content company.

Harry Evans Sloan is a media investor, entrepreneur and studio executive, and Vice Chairman of the Board. Mr. Sloan co-founded Flying Eagle (NASDAQ: FEAC), a special purpose acquisition vehicle, in 2020, and serves as its Chief Executive Officer and Chairman. Additionally, Mr. Sloan co-founded Global Eagle Acquisition Corp., a special purpose acquisition vehicle, in 2011, serving as its Chairman and Chief Executive Officer through its business combination with Row 44, Inc. and Advanced Inflight Alliance AG in January 2013, and remains a director of the combined company, Global Eagle Entertainment Inc. (NASDAQ: ENT). He was also a founding investor in a number of other special-purpose acquisition vehicles, including Silver Eagle Acquisition Corporation, in which he served as Chairman and Chief Executive Officer from April 2013 through its business combination with Videocon d2h Limited (Nasdaq: VDTH) in March 2015, Double Eagle Acquisition Corporation, Platinum Eagle Acquisition Corporation, and DEAC.

Opinion:

Name: Benjamin William Stephen
Position: Director
Transaction Date: 2022-02-25 Shares Bought: 18,000 Average Price Paid: $14.05 Cost: $252,920
Company: Ares Commercial Real Estate Corp (ACRE)
Ares Commercial Real Estate Corporation is a specialist in commercial real estate financing. The primary business of the company is to originate and invest in commercial real estate loans and related assets. The Company’s main operating sector is dedicated to directly originating and managing a broad portfolio of commercial real estate (CRE) debt-related assets for its own account. Senior mortgage loans, subordinated debt, preferred stock, mezzanine loans, and other CRE investments, including commercial mortgage-backed securities, are among the Company’s holdings. These investments are typically held for investment purposes and are secured, directly or indirectly, by the office, multifamily, retail, industrial, lodging, senior living, self-storage, student housing, residential, and other commercial real estate properties, or ownership interests in such properties. Ares Commercial Real Estate Management LLC (the Company’s portfolio manager) manages the Company’s portfolio.

William Stephen Benjamin is now the Chairman of Ares Commercial Real Estate Corp. Impetus (UK) Ltd. and Ares Management UK Ltd. are also on Mr. Benjamin’s board of directors. Mr. Benjamin formerly worked as a Senior Partner at AREA Property Partners LP and a Principal at Bankers Trust Corp. He holds an MBA from the University of Pennsylvania’s Wharton School and a bachelor’s degree from Harvard University. According to the Form 4 filed with the SEC, William has traded Ares Commercial Real Estate Corp stock three times since 2018. Most recently he bought 18,000 units of ACRE stock worth $252,900 on 23 February 2022. The largest trade he’s ever made was buying 18,000 units of Ares Commercial Real Estate Corp stock on 23 February 2022 worth over $252,900. On average, William trades about 11,338 units every 483 days since 2018. As of 23 February 2022 he still owns at least 36,596 units of Ares Commercial Real Estate Corp stock. You can see the complete history of Mr. Benjamin’s stock trades at the bottom of the page.

Opinion:

Name: Dubuc Manuel Perez
Position: CEO
Transaction Date: 2022-02-17 Shares Bought: 10,000 Average Price Paid: $13.10 Cost: $130,996
Company: Fluence Energy Inc. (FLNC)

Name: Bulls Herman E
Position: Director
Transaction Date: 2022-02-18 Shares Bought: 10,000 Average Price Paid: $12.54 Cost: $125,357
Company: Fluence Energy Inc. (FLNC)
Fluence Energy, Inc. provides energy storage products and services and digital applications worldwide for renewables and storage applications. The company sells energy storage products with integrated hardware, software, digital intelligence, and engineering and delivery services to support the deployment of its storage products, operational and maintenance, energy storage-as-a-service, and digital applications and solutions. It serves utilities, developers, and commercial and industrial customers. The company was founded in 2018 and is headquartered in Arlington, Virginia. Fluence Energy, LLC operates as a subsidiary of Siemens Aktiengesellschaft and The AES Corporation. Fluence is enabling the global clean energy transition with market-leading energy storage products and services and digital applications for renewables and storage. Fluence brings proven energy storage products and services and digital applications for renewables and storage to support the modernization of their energy networks. They are the partner that can deliver globally with the most experienced and knowledgeable team in the world. Fluence is the result of two industry powerhouses and pioneers in energy storage joining together to form a new company dedicated to innovating modern electric infrastructure.

Mr. Dubuc served on the Fluence Board of Directors since 2018 and was selected by the Board to lead the company’s next phase of growth. Fluence continues to invest in its technology platform and digital intelligence capabilities designed to meet the expanding energy storage needs of customers, with a goal of building another 3 gigawatts (GW) of projects around the world over the next two years. His close working relationship with Mr. Coughlin and with board members from both AES and Siemens ensures a smooth transition that builds on the market leadership position held by Fluence. Coughlin became CEO of Fluence in January 2018 after serving as one of the lead architects of the joint venture that became Fluence. Under his leadership, Fluence grew from an initial 485 MW of projects to the current 1.7 GW awarded or delivered in 21 countries, including several of the largest energy storage projects in the world.

Herman Bulls is the Director of Fluence Energy Inc; He is an experienced real estate, finance, marketing, and operations executive. Herman also has extensive Fortune 500 Board experience. He is also an Effective communicator who brings groups together to solve challenging issues. In 2017, the National Association of Corporate Directors (NACD) Herman was named to its list of Directorship honorees, which recognizes the 50 most influential directors in the boardroom.

Opinion: In order for solar and wind to work, you have to have a way of storing the energy when the sun doesn’t shine and the wind doesn’t blow. That’s batteries.  Putting solar and a windmill in everyone’s backyard doesn’t work. It’s a romantic version of the green future that’s impractical and will never happen. Its more practical to deliver alternative energy at scale, not distributed. Although there is certainly a need for backup reliable power at the individual level, the cost efficiency of utility-scale renewables overwhelms the economics.  Plus the politics don’t make sense. Any municipality or government that weakens their grid-scale utility company threatens the welfare of the population. Electricity is the heartbeat of our industrialized world.

So when Siemens Renewables and AES proposed to spin-off their utility-scale battery venture there was a lot of excitement. FLNC was spun out at $35 with a lot of enthusiasm. Then reality set in. This is a new company, no one followed it, no one seemed to know what it can earn or even what the opportunity is.

Boom- FLNC reports Q1 revenue $174.9M, consensus $198.8M. CEO Manuel Perez Dubuc says: “I’m pleased to report that we exceeded expectations for new customer orders of our energy storage products during the first fiscal quarter despite short-term headwinds. We take comfort in our $1.9 billion backlog that continues to grow and provide additional visibility to future cash flow. Operationally, we now have 4.2 GWs of energy storage products deployed or contracted worldwide and have strong visibility to future cash flows through our backlog. More importantly, we continue to see strong growth in our digital business providing us with confirmation of our strategy and execution. I am most excited about the progress we’ve made in our digital business, first with our Pexapark partnership and more recently with our 1.1 GW Fluence IQ contract with AES. This contract is the largest digital award ever and enables us to meet our 2022 annual recurring revenue target for Fluence IQ, seven months ahead of schedule. We are still seeing some headwinds associated with supply chain disruptions from COVID-19 as well as project cost overruns from our first Gen 6 product installations and commissioning. We’ve taken swift action to mitigate these challenges that provide us the confidence to reaffirm our fiscal year 2022 guidance. This guidance assumes that ongoing energy storage supply chain disruptions and temporary closures of customer constructions sites will be resolved during 2022.”

So now we’re at $12 per share.  What are insiders doing? They are showing a religious belief but it hasn’t approached a monetary one. These are relatively small dollar buys. They are building positions and so are we.

Name: Scherzinger Chris M.
Position: CEO
Transaction Date: 2022-02-18 Shares Bought: 20,000 Average Price Paid: $9.96 Cost: $199,100
Company: Weber Inc. (WEBR)
Weber Inc. is an outdoor cooking company. The Company is engaged in providing outdoor cooking products. The Company’s outdoor products include gas grills, charcoal grills, wood pellet grills, electric grills, smokers, grilling accessories, and solid fuel products including charcoal briquettes, lump charcoal, pellets, and wood chips and chunks. It provides products across the United States, Germany, Australia, Canada, and France. The Company also provides Weber Connect, is technology-enabled grills, a mobile application, and a cloud-based infrastructure on a single interconnected platform. The Company markets through an omnichannel network comprised of wholesale, DTC, and e-commerce channels. The Company has 170 Weber branded retail stores and Weber Grill Academy sites.

Chris M. Scherzinger has served as Chief Executive Officer and a Director of Weber since April 2018. Mr. Scherzinger held a variety of executive leadership roles at Jarden Corporation and its 2016 acquisitor Newell Brands from 2008 to 2018, including President and CEO of the Appliances & Cookware operating company in Newell Brands, and President and CEO of Jarden Branded Consumables in Jarden Corporation. In addition, Mr. Scherzinger has a rich background in global marketing leadership and brand management with world-class companies like Procter & Gamble and Johnson & Johnson, as well as in manufacturing operations management with General Electric. Mr. Scherzinger graduated from the University of Notre Dame with a BS in Mechanical Engineering and an MBA from Northwestern University’s Kellogg School of Management.

Opinion: I don’ have time for this one.  Want to make money or barbecue?

Name: Mott David M.
Position: Director
Transaction Date: 2022-02-18 Shares Bought: 151,472 Average Price Paid: $1.45 Cost: $219,667
Company: IMARA Inc (IMRA)
Imara, Inc. is a clinical-stage biopharmaceutical company. The Company is engaged in developing and commercializing novel therapeutics to treat rare inherited genetic disorders of hemoglobin. The Company’s product pipeline includes IMR-687 (tovinontrine). IMR-687 is an oral, once-a-day, potentially disease-modifying treatment for sickle cell disease (SCD and beta-thalassemi. IMR-687 is a selective, potent small molecule inhibitor of phosphodiesterase-9 (PDE9), that has a multimodal mechanism of action that acts primarily on red blood cells (RBCs) and has the potential to act on white blood cells (WBCs), adhesion mediators and other cell types. PDE9 decreases cyclic guanosine monophosphate (cGMP), an active signaling molecule. The Company is conducting Phase II b clinical trials of IMR-68. Imara Inc is a clinical-stage biopharmaceutical company engaged in developing and commercializing novel therapeutics to treat patients suffering from rare inherited genetic disorders of haemoglobin. Imara Inc. has 27 total employees across all of its locations and generates $8.16 million in sales (USD). (Sales figure is modelled). There are 2 companies in the Imara Inc. corporate family.

David M. Mott has served as a member of Imara’s board of directors since January 2016. Mr. Mott is a private investor through Mott Family Capital. From September 2008 to February 2020, Mr. Mott was general partner at New Enterprise Associates (“NEA”) and led the healthcare investing practice. Prior to joining NEA, Mr. Mott was President and Chief Executive Officer of MedImmune, a biotechnology company. He joined MedImmune in 1992 and served in various roles, including president and chief executive officer from October 2000 through July 2008 and previously Chief Financial Officer and President and Chief Operating Officer. Mr. Mott led the sale of MedImmune to AstraZeneca in June 2007 for $15.6 billion. Earlier in his career, he was a Vice President in healthcare investment banking at Smith Barney, Harris Upham & Co., Inc.

Opinion: Small cap