Curious how well insiders are doing with their buys? Scroll the significant buys of the last year.
Merger activity increased significantly last week with six new deals announced and eight deals completed. There were 17 deals announced in the month of March, with a total value of $64.55 billion. I read from more than one source, that over $1 Trillion of private equity money is waiting to be deployed. Five companies we’ve blogged about have already been bought out this year. We are fully in the nether world of earnings blackout. It’s difficult anytime to discern the mood of corporate America but the period thirty days prior to and one day after quarterly earnings release are deliberately void of any communication about the health of a public company’s business. It’s the blackout period. Not as sexy as a black hole but nonetheless filled with mischieve and potential danger.
Name: Ziemer James L
Position: Director
Transaction Date: 2022-04-05 Shares Bought: 10,000 Average Price Paid: $80.53 Cost: $805,295.00
Company: Thor Industries Inc. (THO)
Thor Industries, Inc. designs, manufactures and sells recreational vehicles (RVs), and related parts and accessories in the United States, Canada, and Europe. The company offers travel trailers; gasoline and diesel Class A, Class B, and Class C motorhomes; conventional travel trailers and fifth wheels; luxury fifth wheels; and motor caravans, caravans, campervans, and urban vehicles. It also provides aluminum extrusion and specialized component products to RV and other manufacturers, and digital products and services for RVs. The company provides its products through independent and non-franchise dealers. The company was founded in 1980 and is based in Elkhart, Indiana. In 1980, THOR Industries embarked on a journey to connect people with nature, and families with each other. Today, the THOR Family of Companies continues the journey by acquiring outstanding outdoor companies which make it easier and more enjoyable for families of all types to create lasting outdoor memories. On the surface, they are the world’s largest manufacturer of recreation vehicles.
Mr. Ziemer, who became a Director in December of 2010, was the President and Chief Executive Officer at Harley Davidson, Inc. from 2005 to 2009 and served as a director for that company from 2004-to 2009. Mr. Ziemer began his career with Harley-Davidson in 1969, working in production, engineering, accounting, parts and accessories, and finance. He was the Chief Financial Officer of Harley-Davidson from 1991 until his election as President and Chief Executive Officer in 2005. From 1993 through 2006, Mr. Ziemer was President of The Harley-Davidson Foundation, Inc. Mr. Ziemer is currently a director of Textron, Inc. The Nominating and Corporate Governance Committee and the Board believe that Mr. Ziemer’s significant management experience as a chief executive officer of a public company, as well as his financial expertise and training, qualifies him for this position.
Opinion: Much of retail stocks are in the tank. Incredible bargain multiples can be found in this stock with massive insider buying. They have a one-year wait time on Airstream. I think private equity will take out this company, rebrand it as Airstream and bring it public again when gas prices settle down and interest rate jitters subside. Back up the RV and fill it up with THOR stock. This one is going to be a homerun for patient investors.
Name: McLallen Walter Field
Position: Director
Transaction Date: 2022-04-05 Shares Bought: 5,000 Average Price Paid: $49.56 Cost: $247,815.00
Company: Lovesac Co (LOVE)
The Lovesac Company is a furniture company that creates, manufactures, and sells furniture. It has seats and sides, as well as sacs, such as foam beanbag chairs, and accessories, such as drink holders, footsac blankets, ornamental cushions, fitted seat tables, and ottomans. The company had 146 dealerships as of January 30, 2022. It sells its items largely through its website, lovesac.com, as well as showrooms at top-tier malls, lifestyle centres, kiosks, mobile concierges, and street locations in 39 states; and pop-up shops and shop-in-shops in stores. The Lovesac Company is based in Stamford, Connecticut, and was formed in 1995.
Walter Field McLallen serves as Independent Director of the Company. Walter F. McLallen serves on our Board and is a finance professional with over 25 years of leveraged finance, private equity, restructuring and operations experience. Since 2004, Mr. McLallen has served as the Managing Member of Meritage Capital Advisors, debt and private equity advisory boutique focused on transaction origination, structuring, and consulting. Mr. McLallen has extensive board and organizational expertise, having served on multiple corporate and non-profit boards and committees as a director, Chairman, or Vice Chairman, with a historical focus on consumer products-related companies.
Opinion: Everything housing-related is down in the stock market. The only thing that is not depressed is insatiable demand. Lovesac still trades at a fairly high multiple considering the depressed nature of the retail sector. Not all insiders are buying at LOVE. The same day CEO Nelson unloaded 700 shares. That’s not a particularly large number. Chew on this though, the last insider buys were bak on 12-26-19 at $12.81
Name: Barta Jan
Position: Pale Fire Capital
Transaction Date: 2022-04-04 Shares Bought: 375,173 Average Price Paid: $20 Cost: $7,504,549.00
Company: Groupon Inc. (GRPN)
Groupon, Inc. is a two-sided marketplace that links customers and merchants on a global scale. Consumers can access the Company’s marketplace through its mobile applications and Websites, as well as through localized groupon.com sites in other regions. North America and International are the two segments in which the company operates. The Company sells items and services in three categories through its online marketplaces: local, goods, and travel. Its Local category contains activities to do, beauty and wellness, and food options from both local and national shops. Its Goods category includes electronics, sporting goods, jewelry, toys, household items, and fashion, among other product categories. Its Travel area includes both reduced and market-rate travel offers, such as hotels, airlines, and package deals for both local and international travel.
Jan Barta, a natural person, is the Chairman of the Supervisory Board of Pale Fire Capital SE. Jan Barta is one of the two controlling persons of Pale Fire Capital SE.
Opinion: Pale Fire Capital is a private equity firm headquartered in Prague, Czech Republic. They have a number of portfolio investments and some successful exits. I found an article on Seeking Alpha that states Groupon’s investment in SumUp’s is worth ~$15 per share. I can’t see Jan Barta buying Groupon outright and I haven’t seen any traditional Groupon insiders taking this bait either. GRPN has forgotten how to grow revenues. There isn’t a day that goes by that founder Andrew Mason doesn’t regret spurning Google’s $5.75 billion offer to buy out the company in 2010 before the planned IPO.
Name: Brandler Harry
Position: Director
Transaction Date: 2022-03-31 Shares Bought: 25,000 Average Price Paid: $19.97 Cost: $499,250.00
Company: Green Brick Partners Inc. (GRBK)
Green Brick Partners, Inc. is a home building and property development corporation with a diverse portfolio. In its residential neighborhoods and master-planned communities, the Company is involved in all parts of the homebuilding process, including site acquisition and development, entitlements, design, construction, title and mortgage services, marketing and sales, and the production of brand images. It is divided into three segments: Central Builder Operations, Southeast Builder Operations, and Land Development. Builder operations Central represents its Texas-based builders, whilst Builder operations Southeast represents its Georgia and Florida-based builders. Through its eight brands of builders, it acquires and develops land and builds homes in four markets. Its primary markets include the Dallas-Fort Worth (DFW) and Atlanta, Georgia metropolitan areas, as well as the Treasure Coast region of Florida. In addition, it has a noncontrolling stake in Colorado Springs.
Since October 2014, Mr. Brandler has been a member of the board of directors. From December 2001 to January 2019, Mr. Brandler was the Chief Financial Officer of Greenlight Capital, Inc. before retiring. Mr. Brandler worked as the Chief Financial Officer of Wheatley Partners, a venture capital firm, from 2000 to 2001, where he handled the firm’s back-office operations and overhauled the firm’s marketing, client relations, and technology. Mr. Brandler worked at Goldstein, Golub & Kessler from 1996 to 2000, where he offered audit, tax, and advisory services to investment partnerships and other financial organizations. In January 1999, he was promoted to Manager. Mr. Brandler graduated from New York University with a B.S. in Accounting in 1993. Mr. Brandler was admitted as a Certified Public Accountant in New York in 1996.
Opinion: Housing stocks are in the trash dump but demand still seems to outstrip supply. Will 5% mortgages and prices that keep rising at double-digit rates kill the pent-up demand? There is some evidence this is happening already. Perception is often reality in the stock market and I don’t think this stock can work well if the entire group remains out of favor.
Name: Farner Jay
Position: CEO
Transaction Date: 2022-04-04 Shares Bought: 46,200 Average Price Paid: $9.84 Cost: $419,256.00
Transaction Date: 2022-04-04 Shares Bought: 46,300 Average Price Paid: $10.76 Cost: $498,042.00
Company: Rocket Companies Inc (RKT)
Rocket Companies, Inc. is a holding company with interests in real estate, mortgage lending, and eCommerce. Rocket Platform is a service provided by the company. Direct to Consumer and Partner Network are two of its segments. Performance marketing and direct engagement through its Rocket Mortgage application are part of its Direct to Consumer strategy. Clients in the Direct-to-Consumer segment can connect with the Rocket Mortgage application or the Rocket Cloud Force, which consists of sales team members spread over the platform. Its Partner Network is a collaboration with leading consumer-focused businesses, brokers, and mortgage specialists who use its platform and scale to offer mortgage solutions to their customers. The Rocket Professional platform helps the company’s Partner Network, which uses its client service and well-known brand to create marketing and influencer relationships, as well as its mortgage broker alliances through Rocket Pro third-party origination (TPO).
Rocket Companies’ Chief Executive Officer and Director is Jay Farner. Since 1996, he has worked for Quicken Loans and has held senior leadership positions since 1999. Jay was President and Chief Marketing Officer before being promoted to CEO in 2017. He is also the Chief Executive Officer and Director of RHI and its subsidiaries. Jay sits on the boards of Detroit Labs, LLC, Community Solutions, StockX, Bedrock Manufacturing, the Metropolitan Detroit YMCA, Bizdom Fund, and Rocket Giving Fund, among others.
Opinion: Farner has stepped us his buying in the besieged market leader. Rocket has been a disaster of a stock, a virtual dumpster fire since going public yet it remains the gorilla in the giant market of home mortgages. Large short interest in this name could lead to explosive gains if a catalyst can be found and the founder and philanthropist, Dan Gilbert, doesn’t decide to hit the bid and donate more money to the revitalization of Detroit. As of March 15th, investors have sold 24,580,000 shares of RKT short. 21.86% of Rocket Companies’ shares are currently sold short. It’s hard to imagine the sentiment getting worse with the constant talk of rising mortgage rates.
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Insiders sell the stock for many reasons, but they generally buy for just one – to make money. You’ve always heard the best information is inside information. Everyone who has any experience at all in the stock market pays close attention to what insiders are doing. After all, who knows a business better than the people running it? Officers, directors, and 10% owners are required to inform the public through a Form 4 Filing any transaction, buy, sell, exercise, or any other within 48 hours of doing so. This info is available for free from the SEC’s Web site, Edgar, although we subscribe to SECForm4 as they provide a way to manage and make sense of the vast realms of data. I’ve tried a lot of vendors. SECForm4 is one of the smaller ones but I like supporting Frank. He is not arrogant. He’s helpful and has great prices. He also trades on his own data so I like people that eat what they kill.
We publish a subscription newsletter called The Insiders Report. We offer a free 30-day trial so you have nothing to lose by trying it out. Be sure to carefully read the TERMS OF SERVICE.
Another source for insider buying and selling and much more is FinViz Elite. FinViz stands for financial visualization and they do an amazing job of providing reams of data and the tools to help you get to the bottom of it, the information that helps me make informed decisions and probable outcomes. I’ve been using their site for years and it only gets better over time.
This is as close to “insider information” that an ordinary investor is likely to see- and it’s entirely legal.
BEWARE– Following insiders can be hazardous to your financial health. It’s just one piece of the investor’s due diligence. The Insiders Fund blog informs you of the purchases that count. As a rule, we only look at material amounts of money 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. Do your own analysis. They can easily be wrong about, and in many cases, maybe most cases have no more idea what the future may hold than you or me. In short, you can lose money following them. We have and we curse aloud, what were they thinking!
We like Fly on the Wall for keeping up with what events might be happening, analysts comment, and whatever else could be moving the stock. Dow Jones news service is an essential tool but many services pick up their feed like they do Bloomberg. For quick financial analysis, it’s hard to beat Old School Value.
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. 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
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