Energy Transfer certainly looks like it is coming home for investors. Oil producers and suppliers have been on a steady ramp for the last month after lagging most of the year. Ironically, lithium carbonate, the basic ingredient in EV batteries, is flirting with multi-year lows as the Inflation Reduction Act hands out $billions to build a domestic supply chain of lithium batteries. Recent headlines trumpet the Administration’s ban on drilling for oil in the Arctic, yet new supply is the panacea for high prices. Conoco looks like the sole U.S. driller to plunge the Arctic unknown, but the market doesn’t seem to give it much credit for such an advantage. Absent a carbon tax, I don’t see what holds back oil company stocks, as high underlying commodity prices make them more valuable. The laws of economics would predict that high gasoline prices will encourage more switching to EVs’. Buy more Albermarle?
If only the dismal science of Economics was that simple. Range, battery anxiety, cost, lack of available charging, and poorly aligned tax credits are all slowing down the adoption of what is only marginally appealing at this point. High gasoline prices will encourage more EV adaption, and that’s why environmentalists might not be railing yet against the combustion engine.
Overall there were slim pickings on the insider buying front. Two other purchases this last week drew some interest from me, but not enough to warrant further analysis. Journey Medical (DERM) had a small buy of $223K and Axalta Coasting Systems AXTA continues to get mixed interest with a $1 Million purchase form Director Stein at slightly lower prices than what a SVP sold $500K worth of stock the prior month. We’ve blogged about this name before if interested go to Insider Buying Week 8-11 and the Summer Doldrums
Name: Check Kian Low
Position: Director
Transaction Date: 2023-09-01 Shares Bought: 11,000 Average Price Paid: $872.03 Cost: $9,592,282
Company: Broadcom LP (AVGO)
Broadcom is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Our over 50-year history of innovation dates back to our diverse origins from Hewlett-Packard Company, AT&T, LSI Corporation, Broadcom Corporation, Brocade Communications Systems LLC, CA, Inc. and Symantec Enterprise Security. Over the years, we have assembled a large team of semiconductor and software design engineers around the world. We maintain design, product and software development engineering resources at locations in the U.S., Asia, Europe and Israel, providing us with engineering expertise worldwide. We strategically focus our research and development resources to address niche opportunities in our target markets and leverage our extensive portfolio of U.S. and other patents, and other intellectual property (“IP”) to integrate multiple technologies and create system-on-chip (“SoC”) component and software solutions that target growth opportunities. We design products and software that deliver high-performance and provide mission critical functionality.
Director Low joined the Board of Directors in December 2016. Mr. Low has served as a founding partner and director of NewSmith Capital Partners LLP, an independent partnership providing corporate finance advice and investment management services, for which he manages the Asia Pacific offices, since 2003. He is an owner and director of Cluny Capital Limited (BVI) since 2007. He has also served as Special Advisor to Singapore Telecommunications Limited since October 2021. Prior to founding NewSmith in 2003, he held various positions at Merrill Lynch & Co., including as Senior Vice-President, member of the Executive Management Committee and Chairman for the Asia Pacific Region. Mr. Low also serves as a trustee of the Nanyang Technological University and Singapore London School of Economics Trust.
Opinion: Broadcom’s Hock Tan, President and CEO , “Our fourth quarter outlook projects year-over-year growth, reflecting continued leadership in networking for generative AI.” “Consolidated revenue for the third quarter grew 5% year-over-year to $8.9 billion and adjusted EBITDA increased 8% year-over-year to 65% of revenue,” said Kirsten Spears, CFO of Broadcom Inc. “We generated $4.6 billion in free cash flow in the third quarter, and expect cash flows to remain solid for Q4.”
Notably absent SoftBank (SFTBY) has lined up some of Arm’s biggest customers as strategic investors for the chip company’s IPO, including Apple (NVDA), Nvidia (NVDA), Intel (INTC) and Samsung (SSNLF), Bloomberg’s Peter Elstrom reports, citing people familiar with the matter. Broadcom is noticeably absent from this list of chip giants.
Name: William J Colombo Position: Director
Transaction Date: 2023-09-01 Shares Bought: 2,200 Average Price Paid: $110.00 Cost: $241,999
Company: Dicks Sporting Goods Inc (DKS)
Dick’s Sporting Goods, Inc. is an American chain of sporting goods stores founded in 1948 by Richard “Dick” Stack. It is the largest sporting goods retailer in the United States, and is listed on the Fortune 500.
William J. Colombo Vice Chairman of. DICK’S Sporting Goods, Inc. Mr. Colombo has served on the board since 2002 and became our Vice Chairman of the board in February 2008, after retiring as President and Chief Operating Officer of the Company, a position he held since 2002.
Opinion: Dicks fell 24% after reporting 3rd quarter sales and reducing the their forecast. It’s hard to see how anyone things that the consumer is that strong. High interest rates have been to bite sharply and will only get worse. Subprime delinquencies are at 2007 levels, the year before the Great Recession of 2008. Dicks is not your ultra high end, nor your low end. It’s smack in the breadbasket of the economy. Prepare for my shoes to drop. Director Colombo is averaging down the cycle. He paid only $80.99 for 5000 shares last June.
Name: Kevin M Stein
Position: Director
Transaction Date: 2023-09-06 Shares Bought: 36,600 Average Price Paid: $27.38 Cost: $1,002,108
Company: Axalta Coating Systems Ltd. (AXTA)
Axalta Coating Solutions Ltd., a Bermuda holding company founded in 2012, is a global leader in manufacturing, marketing, and distributing high-performance coatings solutions. They have a 150-year history in the coatings sector and are known for producing high-quality products under well-known names backed by market-leading technology and customer service. Throughout history, they have remained at the forefront of their industry by constantly inventing revolutionary coatings technologies meant to improve our clients’ goods’ performance, aesthetics, and sustainability while increasing their productivity and profitability. The company size and strong local presence are crucial to our success because they allow them to use their global technology portfolio and client relationships while satisfying local customer demands.
Dr. Stein has been an independent director at Axalta since September 2023. He is the President and CEO of TransDigm Group Incorporated, serving on the Board of Directors. Dr. Stein joined TransDigm in 2014 as Chief Operating Officer of the Power and Controls Segment. He became the company’s Chief Operating Officer and President in January 2017 before being appointed CEO in April 2018. Dr. Stein previously held significant leadership positions with Precision Castparts Corporation, now a division of Berkshire Hathaway. He is a Trustee of the Cleveland Institute of Music, an independent conservatory of music in Cleveland, Ohio, and a Trustee of Gilmour Academy, an independent, co-educational school in the Cleveland suburb of Gates Mills, Ohio. Dr. Stein received his bachelor’s degree in Chemistry from Hobart College and his master’s and doctorate degrees in Inorganic Chemistry from Stanford University.
Opinion:
Name: Marshall S III Mccrea
Position: Co-CEO
Transaction Date: 2023-09-01 Shares Bought: 50,000 Average Price Paid: $13.64 Cost: $682,000
Transaction Date: 2023-09-05 Shares Bought: 50,000 Average Price Paid: $13.79 Cost: $689,500
Company: Energy Transfer LP (ET)
Energy Transfer LP is a Delaware limited partnership whose common units trade on the New York Stock Exchange under the ticker symbol “ET.” Sunoco LP and USAC, both publicly traded master limited partnerships, also have assets in the corporation. Energy Transfer generates cash flow through distributions made by its subsidiaries, which include Sunoco LP and USAC. The amount of cash distributed to us by their subsidiaries is determined by the earnings from their specific business activities and the available cash. The primary financial requirements of Energy Transfer are partner payouts, general and administrative expenses, and debt repayment. After achieving the previous cash criteria, Energy Transfer pays any remaining funds to its Unitholders every quarter.
Mr. McCrea has been the Co-Chief Executive Officer since January 2021. He is also the Chief Commercial Officer of ET. Mr. McCrea was named to the board of directors of Energy Transfer LP (ET) in December 2009. Mr. McCrea was the Energy Transfer family’s Group Chief Operating Officer and Chief Commercial Officer from November 2015 to October 2018. Before that, he was President and Chief Operating Officer of Energy Transfer Operating, L.P. from June 2008 to November 2015 and President of midstream from March 2007 to June 2008. He formerly served as Senior Vice President – Commercial Development from January 2004. Mr. McCrea was designated President of La Grange Acquisition LP, Energy Transfer’s major operational company, in March 2005, after serving as Senior Vice President-Business Development and Producer Services since 1997.
Opinion: I’ve never understood why ET traded so cheaply with a 9%+ yield. Apparently, The Co-CEO McCrea felt the same way. With interest rates likely near a peak, and resilient oil prices, there’s much to like here.
Name: Lindsay A Md Rosenwald
Position: Director
Transaction Date: 2023-09-06 Shares Bought: 100,000 Average Price Paid: $2.23 Cost: $223,000
Company: Journey Medical Corp (DERM)
Journey Medical Corp, launched in October 2014, is a commercial-stage pharmaceutical company focused on researching and marketing pharmaceutical medicines for treating dermatological diseases. They currently market eight branded and three authorized generic prescription medications for dermatological diseases in the United States. The company is led by experienced life science executives with a track record of creating value for their stakeholders and bringing novel medicines to market, allowing patients a higher quality of life and physicians and other licensed medical professionals to provide better patient care. Since the start, they have made considerable investments to enhance their commercial product portfolios, which, combined with the experienced dermatology sales leadership team and recently enlarged field sales force, will position their firm for success.
Dr. Rosenwald has been a member of the Board of Directors since October 2009 and has been Fortress Biotech, Inc.’s Chairman, President, and CEO since December 2013. Dr. Rosenwald is also a director of Mustang Bio, Inc., the Chairman of the Board of Directors of Avenue Therapeutics, Inc., and Checkpoint Therapeutics, Inc. He was Interim President and Chief Executive Officer of Checkpoint Therapeutics, Inc. from November 2014 until August 2015. Dr. Rosenwald was the Chairman of Paramount BioCapital, Inc. from 1991 to 2008. Dr. Rosenwald has been a biotechnology entrepreneur for 25 years, starting and recapitalizing various public and private biotechnology and life sciences enterprises. Dr. Rosenwald graduated from Pennsylvania State University with a B.S. in Finance and from Temple University School of Medicine with an M.D.
Opinion:
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You can be an insider, too– by clicking here
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 with any stock market experience 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 of 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, we analyze unusual patterns with selling, 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, are horrendously poor. Also, planned sales that 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 on which we are trying to read the tea leaves. I say generally because some 10% shareholders are great investors. Think Warren Buffett 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 probes 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.
This blog is solely for educational purposes and the author’s own amusement. Think of the blog as part of my personal investment journal that I am willing to share with the DIY investor. There are also many parts that I am not willing to share if I think it could influence trading action or be detrimental to the Fund’s partners. We could be long, short, or have no position at all in any of the stocks mentioned and express no written or implied obligation to disclose any of that.
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.
You can be an insider, too– by clicking here
Prosperous Trading,
