There was next to nothing to write about regarding insider activity last week. We are in the heart of darkness regarding insider activity. This is how I describe the quarterly blackout period before corporate earnings are released. Insiders seem to be as gloomy as all the market pundits. They might not be paying much attention, but the market, as measured by the S&P 500, is up over 8% YTD. Hopefully, we have something clever to say about that in our 1st Quarter Partner letter. It’s up on our website at Partner Letters.
The world changed on March 10th when the Government shut down Silicon Valley Bank. The Fed stopped hiking rates even though they won’t acknowledge that. They might not even know it. They continue to pretend to raise rates to combat inflation, but in reality, the Fed follows the 2-year Treasury futures market, according to bond guru Jeffrey Gundlach. Forget what you read and hear from industry pundits and Federal Reserve mouthpieces. The market has spoken. If you look at the CME futures chart, it’s as clear as the nose on your face. Interest rate hikes are over. (note bond prices move inversely with rates)
Name: Alexis P Michas
Position: Director
Transaction Date: 2023-04-10 Shares Bought: 66,952 Average Price Paid: $14.45 Cost: $967,456.00
Company: AstroNova Inc. (ALOT)
AstroNova Inc creates, develops, manufactures, and distributes a wide range of specialty printers and data gathering and analysis systems, including hardware and software, that use innovative technologies to capture, store, analyze, and show data in a variety of formats. Aerospace, clothing, automotive, avionics, chemicals, computer peripherals, communications, distribution, food and beverage, general manufacturing, packaging, and transportation are among the hardware and software goods markets. The company’s goods are sold all over the globe through sales staff, authorized dealers, and independent dealers and agents. The company’s expertise in data visualization technologies is used to develop, produce, and sell specialty printing systems, test and measurement equipment, and associated services for chosen expanding industries worldwide.
Alexis P. Michas was appointed to the Board of Directors in June 2022. Mr. Michas is the founder and Managing Partner of Juniper Investment Company, LLC, which he founded in 2008. Juniper is also a Principal of Aetolian Investments, LLC, a registered commodities pool operator. Mr. Michas earned a Bachelor of Arts from Harvard College and a Master of Business Administration from Harvard Business School. Mr. Michas is the Non-Executive Chairman of the Board of BorgWarner Inc., a director of funds managed by Atlantic Investment Management, Inc., and the Non-Executive Chairman of the Board of PerkinElmer, Inc. He also serves on the board of the privately owned Theragenics Company. Mr. Michas is the Chairman of the United States Board of Trustees of Athens College, a non-profit organization.
Opinion: The aerospace product line drove 61% top-line growth in the test measurement. That’s an impressive turnaround but the story doesn’t do much for me.
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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.
The bar is different from selling because the natural state of management is to be a seller. This is because most companies provide significant amounts of management compensation packages as stock and options. Therefore, with selling, we analyze 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 this corporate welfare loophole. 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. I say generally because some 10% shareholders are great investors. Think Warren Buffett, Icahn, and others
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, 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’ comments, 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.
A big callout to my assistant Ambreen who sets up this conversation by listing the notable buys that I’ve identified. She probs the 10k for a reasonable description of the business. I’ve found that to be the most accurate and succinct place to find out what a business actually does. The websites and marketing material are just that, poorly disguised marketing material for many. I should know that better than most if you at my past involvement in building the 1st websites for many Fortune 500 companies.
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.
This blog is solely for educational purposes and the author’s own amusement. Don’t rely on this blog. Think of the blog as part of my personal investment journal that I am willing to share with the DIY investor. We welcome your comments on our analysis but please do your own research. Investing with The Insiders Fund is for qualified investors and by Prospectus only. Nothing herein should be construed otherwise. THE INSIDERS FUND prefers to invest in companies at or near prices that management has been willing to invest significant amounts of their own money in but we have no requirement to do so. We also invest in many companies in anticipation of future insider buying or with the expectation that there is none at all.
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Prosperous Trading,
