The difference between the 10-year Treasury Bond yield and the S&P 500 dividend yield is the largest it’s been since 2007. The spread between interest earned on Treasury Bills and dividends reached levels not seen in 40 years. ~5% money market rates and an S&P 500 dividend yield of 1.52% cannot coexist indefinitely. This is not a condition for equilibrium. Something must give. Great amounts of money will be made in getting this right. In the immortal words of Dylan, the poet laureate, “Something is happening here; But you don’t know what it is.”
The market changed its narrative last week from higher for longer interest rates to rates are coming down and by a lot. Bond king, Jeffrey Gundlach, offered his commentary on Chairman Powel’s announcement that the Fed would hold rates steady by stating, “If the economy rolls over as I expect, the Fed is not going to cut rates 50 basis points; they’re going to cut rates 200 basis points.” Earlier in the week, investment legend Stanley Druckenmiller talked his book by saying he had made a massive leveraged bullish bet on the two Treasury. This must have paid off handsomely, as Fridays below consensus jobs numbers capped a week of plunging rates and skyrocketing equity prices.
While higher for longer might be dead for a while, insider buying offers clues as to where bargains might await. You can be an insider, too– by clicking here.
Name: William Reid Sanders
Position: Director
Transaction Date: 2023-11-01 Shares Bought: 2,200 Average Price Paid: $115.75 Cost: $254,647
Company: Mid America Apartment Communities Inc. (MAA)
Mid America Apartment Communities Inc. is a real estate corporation dedicated to offering residents in the Southeast, Southwest, and Mid-Atlantic regions of the United States a high-quality apartment living experience. Combining the strength of corporate solutions with their decentralized operational structure capitalizes on unique market knowledge and gives greater responsibility than a completely centralized framework. The company uses a web-based property management system to maximize the information transmitted between senior management and the properties in real-time. The system includes property and accounting modules that enable operational savings and ongoing expense control, as well as numerous enhanced revenue management practices that increase assistance for on-site property operations. They use a “yield management” pricing program to assist property managers in optimizing rental income, as well as purchase order and accounts payable software to give improved controls and management information.
William Reid Sanders is a businessman who started Southeastern Asset Management, Inc. and has led five other firms. Mr. Sanders is Co-President of Sanders Properties, Inc. and President of Sanders Investments LLC. He is also the Chairman-Trustee Board of the Hugo Dixon Foundation and serves on the boards of six other businesses. Mr. Sanders previously held the positions of Chairman at Two Rivers Capital Management at Kingsmill, Inc., Executive Vice President and President at Southeastern Asset Management, Inc. and Longleaf Partners Funds Trust, Chief Investment Officer at First Tennessee Investment Management, Inc., and Principal at Union Planters Bank, NA. William Reid Sanders earned his bachelor’s degree from the University of Virginia.
Opinion: Apartment REIT yielding 4.53% might have found a bottom. If rates steadily go down, many REITs will be big winners.
Name: Claire C. McCaskill
Position: Director
Transaction Date: 2023-10-31 Shares Bought: 27,819 Average Price Paid: $35.95 Cost: $999,996
Company: Mobileye Global Inc. (MBLY)
Mobileye is a pioneer in the development and deployment of sophisticated driver assistance systems as well as autonomous driving technology and solutions. They pioneered ADAS technology over 20 years ago and have consistently increased the scope of our ADAS services while leading the evolution to autonomous driving solutions. The company’s solution portfolio is built on a comprehensive suite of purpose-made software and hardware technologies designed to deliver the capabilities required to make the future of ADAS and autonomous driving a reality. These technologies can deliver mission-critical capabilities at the edge and in the cloud, improving road user safety and revolutionizing driving experiences and the global flow of people and things. They believe that the industry-leading technology platform, built on over 20 years of research, development, data collection and validation, and purpose-built software and hardware design, can deliver excellent safety ratings, lead ADAS solutions, and mass deploy autonomous driving solutions.
Claire C. McCaskill has been a member of the board of directors of Mobileye since October 2022. Senator McCaskill has been a political analyst for NBCUniversal Media, LLC, and a corporate speaker through the Washington Speakers Bureau since 2019. Senator McCaskill formerly served as a United States Senator from Missouri from 2007 to 2019, as State Auditor of Missouri from 1999 to 2007, and as elected County Prosecutor for Jackson County from 1992 to 1999. Senator McCaskill received her B.A. and J.D. at the University of Missouri. Senator McCaskill was chosen to serve on our board of directors because of her significant experience in government as an elected person, which offers the board of directors important information on government relations at the state, federal, and international levels, as well as her legal background.
Opinion: Claire McCaskill is likely a very informed director, and $1 million is real money for most people, but Claire is rich, and her husband is even richer.
Name: David S Taylor
Position: Director
Transaction Date: 2023-10-27 Shares Bought: 10,000 Average Price Paid: $30.75 Cost: $307,500
Company: Delta Air Lines Inc. (DAL)
Delta Air Lines is a legacy carrier and one of the major airlines in the United States. As a global airline headquartered in the United States, the company connects consumers globally while maintaining an industry-leading commitment to customer service, safety, and innovation. In 2022, demand for air travel grew rapidly beginning late in the March quarter and continued to rise throughout the year. During the year, they served around 177 million clients. Delta’s most valuable competitive advantage is its people and culture. Their employees provide world-class travel experiences and best-in-class consumer service, resulting in client satisfaction and brand preference. In 2022, they continued to invest in their people, recruiting about 25,000 new team members as we restructured the airline.
Mr. Taylor is a Senior Operating Advisor with Clayton, Dubilier & Rice, a private investment business. From November 2021 until June 2022, he was the Executive Chairman of the Board of Directors of The Procter & Gamble Company. He formerly served as Procter & Gamble’s President and Chief Executive Officer from 2015 to November 2021, as well as Chairman of the Board from 2016 to November 2021. Mr. Taylor joined Procter & Gamble in 1980 and has held a variety of positions of increasing responsibility in North America, Europe, and Asia, including Group president of Beauty, Grooming, and healthcare, Group president of Health and grooming, Group president of Home Care, and president of Family Care.
Opinion: Taylor has been accumulating some Delta stock. I don’t see anything about board member stock ownership requirements, so this may be an opportunistic buy. Delta is trading at 52-week lows, yet anyone who flies knows that empty plane seats are rare.
Name: Thomas D Woods
Position: Director
Transaction Date: 2023-11-01 Shares Bought: 25,000 Average Price Paid: $26.25 Cost: $656,250
Company: Bank Of America Corp (BAC)
Bank of America Corporation is a Delaware corporation that operates as both a bank holding company and a financial holding company. Bank of America is one of the world’s largest financial institutions, offering a full range of banking, investing, asset management, and other financial and risk management products and services to individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments. The headquarters are at the Bank of America Corporate Centre, 100 North Tryon Street, Charlotte, North Carolina 28255. The company utilizes its website to convey company information, including substantial, non-public information, and to meet its disclosure responsibilities under Regulation FD. They routinely post and make available on their website financial and other information about the Corporation, including environmental, social, and governance information.
Thomas D. Woods is a businessman who has served as the CEO of seven different firms and is currently the Vice president of Management at Fulham Co., Inc. He is also a director of Bank of America Corp. Mr. Woods previously served as Chairman of Hydro One Ltd. and Chairman of Hydro One, Inc. (a subsidiary of Hydro One Ltd.), Vice Chairman and Senior Executive Vice President of Canadian Imperial Bank of Commerce, and Chief Financial Officer of CIBC World Markets, Inc., Chairman of Covenant House, Director of St. Joseph’s Health Centre, and Chairman of the CIBC Children’s Foundation. Thomas D. Woods earned an undergraduate degree from the University of Toronto and an MBA from Harvard Business School.
Opinion: BAC is Butffet’s favorite bank stock but a slowing economy and a weak
Name: Thomas J Hook
Position: President and CEO
Transaction Date: 2023-10-31 Shares Bought: 125,000 Average Price Paid: $20.98 Cost: $2,621,980
Company: Barnes Group Inc (B)
Barnes Group Inc. is a global provider of highly designed products, differentiated industrial technology, and innovative solutions to various end markets and clients. Its specialized products and services are used in various applications, including healthcare, automation, packaging, aerospace, mobility, and manufacturing. The Company’s professional and devoted workers worldwide are committed to the highest performance standards and delivering steady, sustainable, profitable growth. The company operates in two worldwide business segments: industrial and aerospace. Moulding Solutions, Force and Motion Control, Automation, and Engineered Components were part of the Industrial category through 2022. The Aerospace section encompasses the Original Equipment Manufacturing business and the Aftermarket business, which includes maintenance repair and overhaul services and the manufacture and supply of aerospace aftermarket spare parts.
Thomas Hook was named President and Chief Executive Officer of Barnes on July 14, 2022. Mr. Hook formerly served as Chief Executive Officer and Director of SaniSure, Inc., a global leader in the design and manufacture of single-use systems and components for drug and vaccine manufacturing, as well as other biotech applications. Mr. Hook has also served as the President and Chief Executive Officer and Chief Operating Officer of Integer, as well as the Chief Executive Officer and Director of Q Holding Company. Mr. Hook was the President of CTI Molecular Imaging’s CTI Solutions Group from 2002 until 2004. Mr. Hook’s qualifications to serve on the Board include his wealth of leadership experience, particularly in the high-tech manufacturing industry, and his substantial knowledge of finance and accounting due to his educational background and multiple executive management positions. Mr. Hook has been a director since 2016.
Opinion: Barnes puked 27% in price on weak Q3 earnings and poor forecast. CEO Thomas Hook tried to reassure investors and spent $2.6M of his own money doing it.
Name: George A Borba Jr
Position: Director
Transaction Date: 2023-11-02 Shares Bought: 97,006 Average Price Paid: $16.83 Cost: $1,632,136
Company: Cvb Financial Corp (CVBF)
CVB Financial Corp. is a bank holding company incorporated in California on April 27, 1981, and registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended. The main activity of CVB is acting as a holding company for the Bank and other subsidiaries involved in banking or related industries. Thus far, CVB has not participated in any other noteworthy endeavors. A variety of bank deposit products are available from us. These include towns and districts, checking and savings accounts, money market and time certificates of deposit for both personal and commercial accounts, and specialized deposit products for title and escrow. Additionally, the company acts as a federal tax depository on behalf of the company clients.
George A. Borba, Jr., is Vice Chairman of the Board and has served on the company board since 2012. In 1990, Mr. Borba, a dairy farmer, joined George Borba & Son Dairy, L.P. as a partner. He also serves on CVB Financial Corp.’s Compensation and Nomination and Corporate Governance Committees. Formerly known as the Bethany Homeless Shelter, The Open Door Network counts Mr. Borba among its board members. In addition to his strong ties within the business community in the Central Valley of California—a crucial area for the bank’s present and future growth—Mr. Borba brings to the Board his extensive knowledge of the dairy and agricultural industries, which are important components of Citizens Business Bank’s loan portfolio.
Opinion: CVB has had a 43% stock rally since its March regional bank sell-off lows adding support to the buy-low sell-high mentality but is it a good idea to buy now? Borba owns a ton of stock but he largely missed that rally.
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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,
