This week’s blog post is especially brief. It’s not because brevity is the soul of wit, either. Insiders are in the third-quarter blackout window; even if they wanted to buy, most cannot. I doubt there would be much buying anyway at these levels as the news is gloomy, and there is clearly a draught in animal spirits. The other reason is that I ran out of time. I went to San Diego for the weekend to attend the Miramar Air Show, the largest military airshow in the country. My business excuse was to observe the Valkyrie stealthy drone firsthand that the CEO of Kratos has been touting. The show was amazing and made you feel proud to be American, even though the vast array of weapons increasingly looks like a vintage airplane show. I had no time or desire to comment on mostly uninspiring purchases. The unmanned drone by Kratos did not get off the ground and was exhibited in the hangar. A government shutdown is not good for small defense contractors or, for that matter, just about anyone in America.
Can you afford not to be an insider? Investors’ anxieties, fears, and uncertainties portend a possible market crash. The Fed was on a relentless path of raising rates in the prelude to the crash of October 1987. The setup is remarkably similar. The good news is that no one seems to like the market.
Name: Thurman J Rodgers
Position: Director
Transaction Date: 2023-09-14 Shares Bought: 32,600 Average Price Paid: $122.76 Cost: $4,001,927
Company: Enphase Energy Inc. (ENPH)
Enphase Energy Inc. is a global energy technology firm incorporated in March 2006 under PVI Solutions, Inc. in Delaware. It then changed its name to Enphase Energy, Inc. in July 2007. The company provides smart, simple solar generation, storage, and communication solutions on a single platform. Today, their intelligent microinverters operate with practically every solar panel created, and when combined with our award-winning smart battery technology, result in one of the industry’s best-performing clean energy systems. For the first time in the growth of the centuries-old system, people can be rewarded for the clean energy they generate and share with their communities, assisting in constructing a new energy future that harnesses the sun. The Enphase Energy SystemTM uses power electronics, semiconductors, and cloud-based software to generate and store solar energy in a high-tech, networked manner.
Thurman John Rodgers has been a board of directors member since January 2017. He offers 34 years of public business CEO expertise to the board. Mr. Rodgers started Cypress Semiconductor Corporation in 1982 and served as president, CEO, and board of directors member until April 2016. Mr. Rodgers served on the board of trustees of Dartmouth College, his alma mater, from June 2004 to December 2012. He now serves on Enovix Corporation, Solaria Corporation, and WaterBit, Inc. boards of directors, in addition to Enphase Energy. Dartmouth College awarded him bachelor’s degrees in physics and chemistry, while Stanford University awarded him master’s and Ph.D. in electrical engineering. Mr. Rodgers devised, developed, and patented VMOS technology while at Stanford.
Opinion: A billionaire or somewhat less buying $4 Million is better than selling, but it’s not a signal that I can bet the farm on. Solar is an obvious part of the solution to decarbonization, but the stocks have not worked well in the last two years. It’s always important not to overpay for promises.
Name: Paul V Jr Walsh
Position: Director
Transaction Date: 2023-09-18 Shares Bought: 20,000 Average Price Paid: $24.83 Cost: $496,520
Company: Semtech Corp (SMTC)
Semtech Corporation, founded in 1960, is a high-performance semiconductor, IoT systems, and Cloud connectivity service provider dedicated to offering high-quality technological solutions that enable a better, more connected, and sustainable world. The company designs, develops, manufactures, and markets a wide range of commercial goods, the bulk of which are marketed into the infrastructure, high-end consumer, and industrial end markets. Their IoT modules, routers, gateways, and managed connectivity solutions are shipped to IoT device makers and corporations to give IoT connectivity to end devices. The semiconductor industry is roughly classified into analog and digital semiconductor goods. Analog semiconductors condition and regulate “real world” functions such as temperature, speed, sound, and electrical current. Digital semiconductors process binary information, such as that utilized by computers.
Walsh offers more than 30 years of financial and leadership experience at multiple big, publicly listed, and private equity-backed firms, especially in the semiconductor industry, most recently as chief financial officer, senior vice president, and treasurer at Allegro MicroSystems Inc. Walsh began his career as a mechanical engineer at R.G. Vanderweil Engineers LLP, a mechanical and electrical engineering firm, from 1987 to 1990. Walsh is currently an adviser to the board of directors and audit committee of Anokiwave Inc., a late-stage semiconductor firm. Walsh holds a B.S. in Mechanical Engineering from the University of Maine, an M.B.A. from Boston University, and a Graduate Certificate in Accountancy from the Bentley University Graduate School of Management.
Opinion: Semtech used to be a Chinese Communist party attempt at semiconductor influence, according to the author of Chip Wars, Chris Miller. That’s an astounding book that is shaping global policy and think tanks.
Name: Sravan Kumar Emany
Position: SVP, Chief Financial Officer
Transaction Date: 2023-09-15 Shares Bought: 36,072 Average Price Paid: $8.32 Cost: $300,119
Company: Ironwood Pharmaceuticals Inc (IRWD)
Ironwood Pharmaceuticals Inc. is a gastrointestinal (GI) healthcare firm focused on enhancing the treatment of GI disorders and redefining the standard of care for GI patients. Microbia, Inc. was formed in Delaware on January 5, 1998. On April 7, 2008, they changed their name to Ironwood Pharmaceuticals, Inc. They focus on developing and commercializing new GI product options in areas of great unmet need, leveraging the demonstrated knowledge and capabilities in GI illnesses. LINZESS® (linaclotide), the commercial product, is the first product approved by the United States Food and Drug Administration, or U.S. FDA, in a class of GI medicines known as guanylate cyclase type C agonists, or GC-C agonists, and is indicated for adult men and women suffering from irritable bowel syndrome with constipation, or IBS-C, or chronic idiopathic constipation, or CIC.
Sravan Kumar Emany is the Chief Financial Officer and Senior Vice President of Ironwood Pharmaceuticals, Inc. Mr. Emany also serves on the boards of six other firms. Previously, he was Managing Director at Bank of America Corp., Managing Director-Mergers and acquisitions at Merrill Lynch, Pierce, Fenner & Smith, Inc., and Managing Director-Mergers and acquisitions Group at BofA Securities, Inc. (all of which are subsidiaries of Bank of America Corp.), and Chief Strategy Officer & VP-Commercial Excellence at Integra LifeSciences Holdings Corp. Sravan Kumar Emany attended The Johns Hopkins University for his undergraduate studies and The Paul H. Nitze School of Advanced International Studies for his doctoral studies.
Opinion: Interesting but I have more work to do.
Name: David S Buzby
Position: Director
Transaction Date: 2023-09-15 Shares Bought: 62,000 Average Price Paid: $4.82 Cost: $298,840
Company: Stem Inc. (STEM)
Stem, Inc., a Delaware corporation, is a global leader in AI-driven clean energy solutions and services, with a large, digitally connected, renewable energy network, offering customers an energy storage system sourced from leading global battery original equipment manufacturers, which they deliver through their partners, including developers, distributors, and engineering, procurement, and construction firms, edge hardware to aid in the collection of site data, Furthermore, in all places where they assist the customers in managing their renewable energy assets, the company have agreements to use the Athena platform to participate in such markets and share the revenue generated by such market participation. The hardware, professional services, and recurring software-enabled services aim to reduce customer energy costs through time-of-use, demand charge management technologies, and a network of virtual power plants while earning money through program and merchant market participation.
David Buzby has spent the last 33 years creating, expanding, and investing in “impact” enterprises, focusing on renewable energy generation, energy storage/grid services, decarbonizing the built environment, recycling, carbon removal, and lithium production. He is also a member of the Climate Transition Capital Acquisition I B.V. boards and Spring Valley Acquisition Corp. II. He was an early investor and board member of Sunrun Inc.; a founding investor, Chairman, and CEO of SunEdison before it was sold to MEMC Electronic Materials, Inc.; and a founding investor, board member, and chair of the audit committee of ValueClick before it was sold to Alliance Data Systems Corporation, as well as an investor and board member of numerous private companies. Mr. Buzby earned his M.B.A. in 1988 from Harvard Business School and his B.A. in 1982 from Middlebury College.
Opinion:
Name: Jason Hsu
Position: Director
Transaction Date: 2023-09-11 Shares Bought: 72,000 Average Price Paid: $2.78 Cost: $200,312
Company: Immix Biopharma Inc. (IMMX)
Immix Biopharma Inc. is a clinical-stage biopharmaceutical firm researching Tissue-Specific Therapeutics TM in oncology and inflammation. Their primary asset, IMX-110, is currently in Phase 1b/2a clinical trials for solid tumors in the United States and Australia. IMX-110 is a negatively charged TSTx that inhibits resistance pathways with a poly-kinase inhibitor and induces tumor cell death with an apoptosis inducer. The TME NormalizationTM Technology enables their medication candidates to circulate in the bloodstream, escape through tumor blood arteries, and address all components of the TME at the same time. They have focused nearly all of the resources from their foundation on developing product and technology rights, undertaking research and development, organizing and staffing the Company, commercial planning, and obtaining financing.
Mr. Hsu is the founder and chairman of Rayliant Global Advisors, a finance professor at the University of California, Los Angeles (UCLA), and a member of the UCLA Anderson School of Management’s Board of Advisors. Reliant is an asset manager focusing on generating alpha by investing in China and other inefficient emerging economies. It manages USD 27 billion in investment assets across equity, fixed-income, and alternative strategies. Mr. Hsu was the co-founder and Chief Investment Officer of Research Affiliates, a quantitative fund manager with over $200 billion under management, before starting Rayliant. Mr. Hsu graduated from the California Institute of Technology with a BS, Stanford University with an MS, and UCLA with a PhD in finance.
Opinion:
Name: William Thomas III Grant
Position: Chief Operating Officer
Transaction Date: 2023-09-15 Shares Bought: 150,000 Average Price Paid: $1.20 Cost: $179,250
Company: SelectQuote Inc. (SLQT)
Name: W Thomas II Grant
Position: Director
Transaction Date: 2023-09-15 Shares Bought: 220,100 Average Price Paid: $1.17 Cost: $256,637
Company: SelectQuote Inc. (SLQT)
Name: Joshua Brandon Matthews
Position: President, SelectQuote Senior
Transaction Date: 2023-09-18 Shares Bought: 97,500 Average Price Paid: $1.16 Cost: $113,295
Company: SelectQuote Inc. (SLQT)
Name: Robert Clay Grant
Position: President
Transaction Date: 2023-09-15 Shares Bought: 184,200 Average Price Paid: $1.14 Cost: $209,988
Company: SelectQuote Inc. (SLQT)
SelectQuote, Inc. is a leading direct-to-consumer distribution and engagement platform for technology-powered insurance products and healthcare services. The company’s insurance distribution business, which has operated for over 35 years, enables consumers to shop for senior health, life, automobile, and home insurance products from a curated panel of the nation’s largest insurance providers transparently and conveniently. As an insurance distributor, they do not insure the customer; they locate consumers seeking insurance products and connect them with insurance carrier partners offering these products. In exchange, they receive commissions from their insurance carrier partners for policies sold on their behalf. Their innovative technology enables a broad funnel approach to marketing by analyzing and discovering high-quality consumer leads from various online and offline marketing channels, including digital marketing, radio, television, and third-party marketing partners.
William “Bill” Grant III has been the COO of SelectQuote since 2019. He served as the company’s Chief Marketing Officer and President of the Senior division from 2017 to 2019. Before that, he spent five years as Senior Vice President of Marketing for the Senior division. He earned his bachelor’s degree from the University of Kansas.
William “Tom” Grant II has been a director of SelectQuote since 2010 and Vice Chairman of the Board since 2017, following his tenure as President of the company from 2015 to 2017. From 2005 to 2007, Mr. Grant was the Senior Vice President of Health and Risk Management at Quest Diagnostics Incorporated, and from 1995 to 2005, he was the Chairman, President, and CEO of LabOne, Inc. Before that, he was the Chairman of the Board and CEO of Seafield Capital Corporation from 1993 to 1995, and the President and CEO from 1990 to 1993. From 1986 until 1990, Mr. Grant was President and CEO of Business Men’s Assurance Company of America. Mr. Grant earned his bachelor’s degree at Kansas University and his master’s degree in business administration at the University of Pennsylvania’s Wharton School.
Joshua Matthews now serves as the President of SelectQuote Senior, an operating division of SelectQuote Inc. The organization has employed him for a significant amount of time, and he has been an integral part of its expansion and development.
Robert Clay Grant serves on the board of SelectQuote Insurance Services Corp. He has been the President of SelectQuote Insurance Services at the University of Kansas for nine years. SelectQuote Insurance Services is a company in the Insurance business based in Kansas, United States.
Opinion:
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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 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,
