I wrote last week that “The assassination attempt on Trump failed, but the Republican Convention succeeded in killing the Trump stock market rally. The week started on a positive note with almost a providential feel. Still, it began unraveling as market participants grappled with what a second-term Trump Presidency might really look like.” It’s a fool’s errand trying to anticipate the hive mind of the market, yet no hedge fund manager dare ignore it despite their assurances of their ‘long term investor’ commitments. So here’s my take, the market began to fixate on what a Republican blowout would mean up and down the ballot in the 2024 Presidential elections. Trump now the presumed winner by the media talking heads, began to fixate on some of his darker impulses like enormous tariffs on imported goods. The market wavered, fluttered, sold off hard as the true state of market bliss is actually a divided government, that checks radical impulses from either party gaining traction.
Over the weeked, Biden had an epiphany, since he was being donor deprived and told he had to go, finally relented to the obvious, he was too old. It happens to everyone if you’re lucky to live long enough. Republican Presidential contender Nicky Haley may have said the most prescient thing of the soundbite cycle, the party that ditches their 80 year old candidate first will win. Welcome Kamala Harris, newly anointed Democratic Presidential candidate. A surge of grass root hope filled her coffers and the market ended on a strong note, alas, we might have divided government and lower rates. Goldilox, right. No, valuations are grotesquely high and insiders noticeably absent. But this is what was meaningful last week.
The first little test of the accuracy of recent insider buying signals kicks off Monday before the open when IART Integra is expected to post a down quarter. Two insiders stepped up and bought Integra Life Sciences, I blogged about this on the last blog post for May.
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Name: William R Johnson
Position: Director
Transaction Date: 2024-07-25 Shares Bought: 5,000 Average Price Paid: $128.61 Cost: $643,035
Company: United Parcel Service Inc (UPS)
United Parcel Service, Inc. was formed in 1907 and is based in Atlanta, Georgia. United Parcel Service, Inc. is a package delivery company that offers transportation and delivery, distribution, contract logistics, ocean freight, air freight, customs brokerage, and insurance services. It operates in two segments: the US Domestic Package and International Package. The United States Domestic Package segment provides time-definite delivery of express mail, documents, small packages, and palletized freight by air and ground services in the United States. The International Package section offers guaranteed day and time-definite international shipping services, including express choices throughout Europe, Asia, the Indian subcontinent, the Middle East, Africa, Canada, and Latin America. The company also provides worldwide air and ocean freight forwarding, post-sales support, and mail and consultation services.
William R. Johnson joined the UPS Board of Directors in 2009. Mr. William R. Johnson is a Chairman of Noosa Yogurt LLC and Sovos Brands Intermediate, Inc. He serves on the board of directors for Plenty Unlimited, Inc. and United Parcel Service of America, Inc. Mr. Johnson has previously worked as an Independent Director at PepsiCo, Inc., an Operating Partner at Advent International Corp., a Non-Executive Chairman at Education Management Corp., an Independent Director at Emerson Electric Co., and Chairman, President, and CEO at H.J. Heinz Co. He has served on the boards of Georgia-Pacific LLC, the Grocery Manufacturers Association, Neighborhood Health Clinic, Inc., and the Clorox Company. He earned his undergraduate degree from the University of California, Los Angeles, and an MBA from the University of Texas in Austin.
Opinion: I have no idea what is going to reverse the UPS swoon. Amazon is building an entire transportation logistic business that chips away as more and more vendors decide to sell through Amazon and adapt them for their logistics. Maybe UPS will wind up a like a co-op transportation alternative system to Amazon. God, I’d hate to have to figure out to counteract the Amazon juggernaut. Might as well sell out to them if Trump gets to be President. Never happen though with the current regulatory Government antitrust crowd.
Name: John W Childs
Position: Director
Transaction Date: 2024-07-18 Shares Bought: 28,400 Average Price Paid: $35.67 Cost: $1,012,983
Company: Biohaven Ltd. (BHVN)
Biohaven Ltd. is a global clinical-stage biopharmaceutical business focused on researching, developing, and commercializing life-changing treatments for patients suffering from chronic neurological and neuropsychiatric illnesses, particularly rare ones. The company’s highly trained executive team has a track record of securing innovative drug approvals for migraine, depression, bipolar illness, and schizophrenia. They are working on therapies for diseases with few or no treatment options, such as Kv7 ion channel modulation for epilepsy and neuronal hyperexcitability, glutamate modulation for OCD and Spinocerebellar Ataxia, myostatin inhibition for neuromuscular diseases, and brain-penetrant Tyrosine Kinase 2/Janus Kinase 1 inhibition for immune function. The company has assembled a highly competent team of senior executives and neuroscience drug developers who combine a fast-paced, results-driven biotech strategy with pharmacological research and development skills.
Mr. John W. Childs joined Biohaven Ltd.’s board of directors on September 27, 2022. Mr. John is Chairman and Partner of J.W. Childs Associates, L.P. In 1995, he co-founded J.W. Childs Associates. Mr. Childs spent seventeen years with Prudential Insurance Company of America, rising to become Senior Managing Director of the Capital Markets Group. He is the Chairman of Sunny Delight and a board member of Kosta Browne, Esselte, Mattress Firm, WS Packaging, and SIMCOM. He was the Chairman of the Board of CHG Healthcare Services before its sale. Mr. Childs holds a bachelor’s degree from Yale and a master’s from Columbia University.
Opinion: An upgrade from Morgan Stanley with a large vote of confidence form Director Childs seems to put the kibosh on the current negative sentiment with Biohaven. I think I might buy more on this one, unfortunately I sold covered calls on the current position. This reminds me over and over why I hate selling covered calls for anything other than short term gains. Stocks are meant for large potential gains, and covered calls turns them into more bond like instruments with limited upside. Search on our blog posts for Biohaven. This has been one of the most interesting cases of insider buying scoring very big. There is a similar situation with Inhibrx, Inc (INBX). We blogged about this name here.
Name: Roger D Carlile
Position: Director
Transaction Date: 2024-07-22 Shares Bought: 25,000 Average Price Paid: $11.25 Cost: $281,250
Company: Resources Connection Inc. (RGP)
Resource Connection, Inc. was founded in 1996 and is based in Irvine, California. Resources Connection, Inc. offers business consulting services to clients in North America, Europe, and Asia Pacific under the moniker Resources Global Professionals. The company provides transactional services such as integration and divestitures, bankruptcy/restructuring, going-public readiness and support, financial process optimization, and system implementation, as well as regulatory services such as accounting regulations, internal audit, and compliance, data privacy and security, healthcare compliance, and regulatory compliance. It offers transformational services like finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics. The corporation was previously known as RC Transaction Corp., but it changed its name to Resources Connection, Inc. in August 2000.
Roger Carlile is an entrepreneur and senior advisor with over 35 years of expertise in the human capital sector. He joined RGP’s Board in 2024 and is now a member of the Compensation, Corporate Governance, and Nominating Committees. Roger launched Ankura Consulting Group, LLC, a global business advising firm, in 2014, and has been CEO and chairman of the board for the past five and six years. Roger spent more than a decade at FTI Consulting, Inc., where he held several leadership positions, including chief financial officer, chief administrative officer, and chief human resources officer, as well as global leader of the firm’s forensic and litigation consulting and technology segments. He previously led KPMG’s forensic services practice globally and in the Americas, as well as at PwC and Deloitte. Roger currently serves on the boards of directors for AOC Holdings, LLC, Cornerstone Advisors, Inc., Rimkus Consulting Group, Inc., and Salus GRC, LLC.
Opinion: These are boring companies with limited margin expansion opportunities. It’s a body count game at the end of the day, slave to the billable hour.
Name: Liberty 77 Capital L.P. / Liberty 77 Fund International L.P. / STM Partners LLC / Steven T Mnuchin
Position: 10% Owner
Transaction Date: 2024-07-23 Shares Bought: 149,682 Average Price Paid: $8.53 Cost: $1,276,323
Company: Lions Gate Entertainment Corp (LGF)
Lions Gate Entertainment Corporation was founded in 1986 and is headquartered in Santa Monica, California. Lions Gate Entertainment Corp. operates in the film, television, subscription, and location-based entertainment industries in the United States, Canada, and across the world. The corporation is divided into three business units: motion pictures, television production, and media networks. The Motion Picture business creates and produces feature films, acquires North American and global distribution rights, distributes North American feature films to cinemas, home entertainment, and television, and licenses global distribution rights. Television Production develops, produces, and distributes series, films, miniseries, and nonfiction programming internationally. Media Networks sells STARZ-branded premium subscription video services both domestically and abroad via over-the-top platforms and video programming distributors such as cable operators, satellite TV providers, and telecommunications companies.
Liberty 77 Capital L.P., doing business as Liberty Strategic Capital, is a private equity firm. The company mostly invests in technological firms. Liberty Strategic Capital services consumers throughout the state of Washington. Steven T. Mnuchin, former Secretary of the Treasury, leads the firm, which was created in 2021.
Liberty 77 Fund International LP engages in the Financial Services sector. The company is headquartered in Washington, D.C.
STM Partners LLC, a Delaware limited liability company, exercises indirect control over the Liberty Manager and the Liberty Funds’ general partner. Steven T. Mnuchin is the President of STM Partners LLC.
Steven T. Mnuchin is the founder and managing partner of Liberty Strategic Capital, as well as the chair of its Investment Committee. Mr. Mnuchin previously served as the 77th Secretary of the Treasury from February 2017 to January 2021. Mr. Mnuchin was in charge of guiding the US Treasury, which aims to maintain a strong economy, stimulate economic growth, and create job opportunities by establishing conditions conducive to success both at home and abroad. Mr. Mnuchin was also in charge of cybersecurity for the financial services sector and all Treasury divisions, including the IRS. Before his confirmation, he founded, chaired, and led Dune Capital Management. He founded OneWest Bank Group LLC and served as Chairman and CEO until the company was sold to CIT Group Inc. Secretary Mnuchin previously worked for The Goldman Sachs Group, Inc., where he was a Partner and Chief Information Officer, in charge of the firm’s global information and technology strategy and operations. Secretary Mnuchin has a bachelor’s degree from Yale University.
Opinion: I still say Mnuchin is going to swallow this also ran movie company lock stock and barrel. For reasons mostly related to emotions and egos, wealthy people want to dab in the movie business. I wouldn’t buy it but since he is going to what’s wrong with a little front running. After all that’s all an investor can do is simulate the future.
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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,
