Opinion:Walgreens and rivals CVS Health, Walmart and Amazon are pushing deeper into providing medical care in drugstores and other retail settings. According to Forbes, Amazon earlier this year closed on its $3.9 billion acquisition of One Medical, which operates more than 220 primary care offices in more than 28 U.S. markets. Meanwhile, CVS Health, which owns the health insurer Aetna, has been doing some wheeling and dealing of its own. CVS earlier this year bought the home care company Signify Health for $8 billion and in May completed its acquisition of Oak Street Health for $10.6 billion in cash, adding a large network of doctor-staffed clinics primarily used by seniors.

In the recent earnings call, CEO Tim Wentworth said: “WBA delivered fiscal first quarter results in line with overall expectations, reflecting disciplined execution in a challenging consumer backdrop. We are evaluating all strategic options to drive sustainable long-term shareholder value, focusing on swift actions to right-size costs and increase cash flow, with a balanced approach to capital allocation priorities. Today we are announcing a 48 percent reduction in our quarterly dividend payment, while maintaining a competitive yield.

Walgreens has been a disaster for investors and it will be a hard task to get for any CEO to make lemonade out of this lemon but sentiment is so bad, maybe it’s good.

Name: Steven R Downing
Position: Director
Transaction Date: 2024-01-05 Shares Bought: 1,568,750 Average Price Paid: $10.00 Cost: $15,687,500
Company: VOXX International Corp (VOXX)

VOXX International Corporation, formerly known as Audiovox Corp., was formed in Delaware on April 10, 1987, as the successor to a corporation founded in 1960 by John J. Shalam, the Chairman and majority stockholder. The company-wide distribution network and long-standing industry partnerships have enabled us to capitalize on rising market possibilities and new niches in the electronics sector. The Company divides its operations into three reportable segments: automotive electronics, consumer electronics, and biometrics. The Automotive Electronics segment designs, manufactures, distributes, and markets rear-seat entertainment devices, automotive security products and devices, remote start systems, vehicle access systems, mobile multimedia devices, etc. The Consumer Electronics segment designs, manufactures, distributes, and markets home theatre systems, A/V receivers, premium loudspeakers, outdoor speakers, business music systems, etc. The Biometrics segment develops, promotes, and sells iris identification and biometric security products.

Steve R. Downing is currently the President, CEO, and Director at Gentex Corp. He also serves on the boards of The Right Place Inc., Unifythings Inc., and Yonomi LLC. In May 2013, he was appointed to Chief Financial Officer and Vice President of Finance, with continued responsibility for all commercial management activities. Steve was elevated to Senior Vice President in June 2015, taking on additional responsibilities for the company’s business development and sales functions. In August 2017, Steve was promoted to President, Chief Operating Officer, Interim Chief Financial Officer, and Treasurer. On January 1, 2018, Steve was promoted to CEO.  He is an Ohio native who earned a Bachelor of Science in Finance from Liberty University.

Opinion: This was a private transaction between Gentex and a hedge fund owner.  Reports  Poor 3rd Qtr results may have created a capitulation moment.  Pat Lavelle, CEO stated, “For the Q3 comparisons, our gross margins grew by 90 basis points and our operating expenses improved by over 2%, resulting in operating income comparable with the prior year period, despite lower sales. The market remained challenging, especially at retail, and the UAW strike adversely impacted our Automotive business as well during the quarter. We see the economy slowing and we’re taking steps to mitigate any further risk, while at the same time, have introduced several new products in new categories that are growing, with an impressive product line-up and a strong customer base in place as we enter calendar year 2024. We expect some continued softness near-term but believe conditions should improve throughout 2024 and into our FY25.”

Name: James C Baker
Position: President
Transaction Date: 2024-01-10 Shares Bought: 50,000 Average Price Paid: $8.84 Cost: $441,800
Company: Kayne Anderson Energy Infrastructure Fund Inc. (KYN)

Kayne Anderson MLP Investment Company is a closed-end equities mutual fund founded and managed by KA Fund Advisors, LLC. Kayne Anderson Capital Advisors, L.P. co-manages the company. The fund makes investments in the United States public stock markets. It invests in energy-related firms’ equities. The fund invests primarily in master limited partnerships that are focused on the energy industry. Incorporated on June 4, 2004, Kayne Anderson MLP Investment Company is based in the United States.

Mr. James C. Baker is a President & CEO at Kayne DL 2021, Inc., at Kayne Anderson BDC, Inc., a Chairman, President & CEO at Kayne Anderson NextGen Energy & Infrastructure, Inc., a Co-Managing Partner at KA Fund Advisors LLC, a Chairman, President & CEO at Kayne Anderson Energy Infrastructure Fund, Inc., a Managing Partner & Co-Head of Energy Infrastructure at Kayne Anderson Capital Advisors LP, a Managing Partner He is on the Board of Directors for Kayne Anderson Income Strategies Fund and Expression Therapeutics LLC. He worked in the energy investment banking group of UBS Securities before joining Kayne Anderson in 2004. Baker worked as an associate in PaineWebber Incorporated’s energy investment banking business before joining UBS in 2000. Mr. Baker received a B.B.A. in Finance from the University of Texas at Austin in 1995 and an M.B.A. in Finance from Southern Methodist University in 1997.

Opinion: 9.76% dividend yield  on the surface looks enticing.   MLPs focused on traditional and next generation energy infrastructure trading at 10% discount to NAV. Consider this is also a leveraged portfolio with thin trading volume. I don’t see the next generation aspect as contributing much if any additional value based on their latest fact sheet.

 

Name: Richard B Hancock
Position: Director
Transaction Date: 2023-12-13 Shares Bought: 38,803 Average Price Paid: $5.21 Cost: $202,036
Company: Avid Bioservices Inc. (CDMO)

Avid Bioservices, Inc. is a contract development and manufacturing organization that offers a wide range of services for the biotechnology and biopharmaceutical industries, including process development, Current Good Manufacturing Practices clinical and commercial manufacturing, and biologics. With 30 years of experience creating biologics, the company offers clinical and commercial drug substance manufacture, bulk packaging, release and stability testing, and regulatory submission support. They also offer a wide range of process development services, including upstream and downstream development and optimization, analytical technique development, cell line generation, testing, and characterization. They continue to pursue a growth strategy that attempts to connect with the expansion of the biopharmaceutical drug substance contract services market. The company believes there is a great opportunity to continue driving organic growth by utilizing its strengths, widening capabilities, growing capacity, and boosting market visibility.

Mr. Hancock was nominated to the Board of Directors in November 2017 and served as our temporary President and CEO from May 2019 to July 2020.  Mr. Hancock has over 30 years of experience in the biologic CDMO industry, most recently serving as President and CEO of Althea Technologies, Inc., a big molecule CDMO that produces a variety of biologics, vaccines, and parenteral products. In addition to Althea, Mr. Hancock has held senior management positions at The Immune Response Corporation and Hybritech Inc. (now part of Eli Lilly & Company). He is currently the Chairman of the Board and Executive Director of Argonaut Manufacturing Services, Inc., a privately-owned CDMO focused on the biotechnology and life sciences industries. Mr. Hancock earned a B.A. in Microbiology from Miami University.

Opinion: I struggle to see much value here.

Name: Alexander R Slusky / Vector Capital Management L.P. / Vector Capital VI L.P./ VECTOR CAPITAL L.L.C.
Position: 10% Owner
Transaction Date: 2023-12-18 Shares Bought: 1,805,569 Average Price Paid: $3.49 Cost: $6,294,268
Company: Liveperson Inc (LPSN)

LivePerson, Inc. is the global market leader in AI-powered customer conversations. Since 1998, LivePerson has facilitated billions of meaningful interactions between consumers and customers. AI has enhanced the capacity to leverage previous discussions to improve the consumer experience and outcomes for the consumers. The company’s enterprise-class cloud-based technology, the Conversational Cloud, allows organizations to communicate with millions of customers as intimately as they would with a single customer. The Conversational Cloud manages interactions across all of a brand’s key digital channels, such as mobile apps, mobile and desktop web browsers, SMS, social media, and third-party consumer messaging services. LivePerson’s robust, cloud-based suite of rich messaging, real-time chat, AI, and automation offerings includes consumer and agent-facing bots, intelligent routing and capacity mapping, real-time intent detection and analysis, queue prioritization, customer sentiment, analytics and reporting, etc.

Alexander R. Slusky is an American businessman who started Vector Capital Management LP and has been CEO of seven companies. He currently holds the positions of Chairman & CEO of Vector Acquisition Corp., Chairman & CEO of Vector Acquisition Corp., Managing Director and Chief Investment Officer of Vector Capital Management LP, and President of Vector Talent II LLC. Slusky also serves on the boards of WatchGuard Technologies, Inc., Cambium Networks Corporation, Cheetah Digital, Inc., and Rocket Lab USA, Inc. Mr. Slusky previously worked as a Product Manager at Microsoft Corp., Analyst at McKinsey & Co., Inc., Principal at Ziff Brothers Investments LLC, Analyst at NEA Management Co. LLC, Chairman for Corel Corp., Director at Ivanti, Inc., and Chairman & CEO at Vector Acquisition Corp. (California). He earned an undergraduate degree from Harvard University and an MBA from Harvard Business School.

Opinion: LivePerson might have been the market leader in AI powered conversation but that train has left the station and LivePerson ain’t on it.

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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,

Harvey Sax
Insomniac Hedge Fund Guy