Someone wrote last week that the situation in the market was ripe for a crash, reminiscent of the Crash of 1987. I lived through that, so I have some personal observations. The Fed had been hiking rates into a rising market. The market had become increasingly schizophrenic, rising sharply, then falling. Unlike then, the Fed has clearly signaled that it has stopped raising rates and plans to reduce them. Rates were also high, but the market had risen for nearly a decade and was due for a correction. The Fed Chairman hiked one time too many, and the market swooned. I don’t think market participants back then expected Greenspan to have the Fed put ready in hand, but he did. The Crash of 1987 was an awesome buying opportunity. If we had a crash today, it would likely be an awesome buying opportunity, but that won’t happen. We all know about the Fed put now, and consequently, market sell-offs, although painful, will likely be brief and shallow. The real problem today is that there is very little value to be had. Insiders know it, and Warren Buffett knows it.
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Name: John H Stone
Position: President and CEO
Transaction Date: 2024-07-26 Shares Bought: 5,000 Average Price Paid: $134.99 Cost: $674,925
Company: Allegion plc (ALLE)
Allegion plc was established in 2013 and is based in Dublin, Ireland. Allegion plc manufactures and distributes mechanical and electrical security equipment and solutions globally. The company provides door controls, systems, exit devices; locks, locksets, portable locks, key systems and services; electronic security products and access control systems; time, attendance, and workforce productivity solutions; doors, accessories, and more. They also offer services and software, such as inspection, maintenance, and repair services for its automatic entrance solutions; software as a service, such as access control, IoT integration, and workforce management solutions; and aftermarket services, design and installation offerings, and locksmith services. Under the brands CISA, Interflex, LCN, Schlage, SimonsVoss, and Von Duprin, the company sells products and solutions to end users in commercial, institutional, and residential facilities such as education, healthcare, government, hospitality, retail, commercial office, and single and multi-family residential markets.
Opinion: Allegion requires directors to own three times their compensation in stock. Mr. Stone has that and more covered. Perhaps he thinks the lock replacement cycle has legs with smart locks and all.
Name: Robert A Niblock
Position: Director
Transaction Date: 2024-07-26 Shares Bought: 5,000 Average Price Paid: $55.50 Cost: $277,476
Company: Lamb Weston Holdings Inc. (LW)
Name: William G Jurgensen
Position: Director
Transaction Date: 2024-07-26 Shares Bought: 10,000 Average Price Paid: $55.43 Cost: $554,291
Company: Lamb Weston Holdings Inc. (LW)
Lamb Weston Holdings, Inc. was established in 1950 and is based in Eagle, Idaho. The company manufactures, distributes, and markets frozen potato products in the United States, Canada, Mexico, and abroad. The company sells frozen potatoes, commercial ingredients, and appetizers under the Lamb Weston brand, as well as under several customer brands. The company also sells its products under its own or licensed brands, such as Grown in Idaho and Alexia, as well as other licensed and retailer-owned brands. They sell its products to quick-service and full-service restaurants and chains, wholesale, grocery, mass merchants, club retailers, and specialty retailers, as well as food service distributors and institutions such as businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores, via a network of internal sales personnel and independent brokers, agents, and distributors.
Robert A. Niblock joined the Board of Directors in March 2020. From 2005 to 2018, he was Chairman of the Board and CEO of Lowe’s Companies, Inc. He also served as President of Lowe’s from 2011 to 2018, having previously held the position from 2003 to 2006. When he was designated Chairman- and CEO-elect at Lowe’s in 2004, he joined the company’s board of directors. He joined Lowe’s in 1993 and has held several leadership positions during his career. He was a member of the Retail Industry Leaders Association’s board of directors, holding positions as secretary, chairman, and vice chairman.
W.G. Jurgensen joined the Board of Directors in November 2016 and was appointed Chairman in September 2017. From 2000 until his retirement in 2009, he was the CEO and a director of Nationwide Financial Services, Inc. and its parent company, Nationwide Mutual Insurance Company. He has served as Chief Executive Officer and Director of several other firms under the Nationwide Group. Before joining Nationwide, he was an Executive Vice President at Bank One Corporation and later Chief Executive Officer of First Card, First Chicago Corporation’s credit card business.
Opinion: French fries bombed last quarter. The company blamed weak global traffic patterns and inflation for a disastrous quarter. A few insiders bought shares and this might be an opportunity. French fries are here to stay.
Name: Paul A Jacobson
Position: Executive Vice President & CFO
Transaction Date: 2024-07-26 Shares Bought: 25,000 Average Price Paid: $44.11 Cost: $1,102,750
Company: General Motors Co (GM)
General Motors Company was formed in 1908 and is based in Detroit, Michigan. General Motors Company creates, manufactures, and sells trucks, crossovers, cars, and auto components, as well as software-enabled services and subscriptions worldwide. The corporation operates in four segments: GM North America, GM International, Cruise, and GM Financial. The company primarily markets its automobiles under the Buick, Cadillac, Chevrolet, GMC, Baojun, and Wuling brands. Furthermore, the company sells trucks, crossovers, cars, and vehicle components to retail dealers, distributors, and dealers, as well as fleet customers, such as daily rental car companies, commercial fleet customers, leasing organizations, and governments. Furthermore, it provides a variety of after-sales services through its dealer network, including maintenance, light repairs, collision repairs, car accessories, and extended service warranties. In addition, the company offers vehicle loans, software-enabled services, and subscriptions.
Paul Jacobson was appointed Executive Vice President and Chief Financial Officer of General Motors in December 2020. Before joining GM, Jacobson was Chief Financial Officer of Delta Air Lines, Inc., which he helped transform into one of Fortune magazine’s Top 50 Most Admired Companies for six years in a row. He has been elected the best CFO in the airline business eight times by Institutional Investor magazine’s survey of Wall Street analysts and investors. Jacobson holds a bachelor’s degree in aviation management from Auburn University and a master’s degree in business administration from Vanderbilt University’s Owen Graduate School of Management. He is a trustee for the Auburn University Foundation, Auburn’s Harbert College of Business Advisory Council, and Vanderbilt’s Owen Graduate School of Management Board of Visitors.
Opinion: High interest rates and EV sales have hurt GM. Perhaps this is a sign of better things to come. I’d like to see more insiders share that view though before I put my foot down on the pedal.
Name: Justin L Jude
Position: President & CEO
Transaction Date: 2024-07-26 Shares Bought: 2,500 Average Price Paid: $39.91 Cost: $99,764
Company: LKQ Corp (LKQ)
Name: Rick Galloway
Position: SVP and CFO
Transaction Date: 2024-07-29 Shares Bought: 2,500 Average Price Paid: $39.88 Cost: $99,700
Company: LKQ Corp (LKQ)
Name: Matthew J McKay
Position: SVP – General Counsel
Transaction Date: 2024-07-29 Shares Bought: 2,500 Average Price Paid: $39.75 Cost: $99,375
Company: LKQ Corp (LKQ)
Name: Andrew C Clarke
Position: Director
Transaction Date: 2024-07-26 Shares Bought: 7,600 Average Price Paid: $39.70 Cost: $301,713
Company: LKQ Corp (LKQ)
LKQ Corporation was established in 1998 and is based in Chicago, Illinois. LKQ Corporation distributes replacement parts, components, and systems for car repair and maintenance, as well as specialty automotive aftermarket products and accessories. The company operates in four segments: wholesale-North America, Europe, specialty, and self-service. The company distributes bumper covers, automotive body panels, and lights, as well as mechanical automotive parts and accessories; salvage products, including mechanical and collision parts comprising engines, transmissions, and door assemblies; sheet metal products, such as trunk lids, fenders, and hoods; lights and bumper assemblies; scrap metal and other materials to metal recyclers; and brake pads, discs and sensors, clutches, steering and suspension products, filters, Furthermore, the company sells recreational vehicle appliances and air conditioners, towing hitches, truck bed covers, vehicle protection items, maritime electronics, cargo management solutions, wheels, tires, and suspension components.
Justin L. Jude was appointed President and Chief Executive Officer in July 2024, having previously served as Executive Vice President and Chief Operating Officer in January 2024. Mr. Jude has been with the company since February 2004 in a variety of positions, including Vice President of Supply Chain from March 2008 to February 2011, Vice President of Information Systems (North America) from February 2011 to May 2014, President of Keystone Automotive Operations, Inc. from June 2014 to July 2015, and Senior Vice President of LKQ Corporation and President of Wholesale – North America from July 2015 to December 2023.
Rick Galloway became Senior Vice President and Chief Financial Officer in September 2022. From July 2019 to September 2022, Mr. Galloway served as the Chief Financial Officer for the Wholesale – North America and Self Service sectors. Mr. Galloway formerly worked at Alcoa Corporation from 2010 until 2019, most recently as Chief Financial Officer of Alcoa’s Engineered Products and Solutions division, which had 97 manufacturing plants across the world. Mr. Galloway began his public accounting career as an auditor for Grant Thornton, working with clients in a variety of industries such as manufacturing, oil and gas, non-profits, and the government.
Matthew J. McKay was appointed Senior Vice President, General Counsel, and Corporate Secretary in March 2021. Before that, he was the Associate General Counsel from December 2007 to May 2016, and the Senior Vice President of Human Resources from June 2016 to March 2021. Before joining the company, Mr. McKay worked as a law clerk for Judge William Bauer at the United States Court of Appeals for the Seventh Circuit.
Andrew Clarke has served as LKQ Corporation’s Director since July 2024. Mr. Clarke has more than 20 years of expertise in the transportation industry. Mr. Clarke currently serves on the board of Element Fleet Management, a TSX-listed worldwide fleet management company. Mr. Clarke previously worked as the Chief Financial Officer of C.H. Robinson, Inc., a NASDAQ-listed firm and one of the world’s top third-party logistics providers, from 2015 to 2019. From 2007 to 2013, Mr. Clarke was the CEO of Panther Expedited Services, Inc., a premium logistics company specializing in automotive, life sciences, government, and manufacturing. From 2000 until 2006, Mr. Clarke held several executive positions, including Senior Vice President and Chief Financial Officer, at Forward Air Corporation, a NASDAQ-listed diversified transportation services company. Mr. Clarke has a Master of Business Administration from the University of Chicago’s Booth School of Business and a Bachelor of Business Administration from Washington University in St. Louis.
Opinion:
Name: Kishore Seendripu
Position: Chairman, President and CEO & 10% Owner
Transaction Date: 2024-07-30 Shares Bought: 108,303 Average Price Paid: $12.94 Cost: $1,401,592
Company: Maxlinear Inc (MXL)
MaxLinear, Inc. was established in 2003 and is based in Carlsbad, California. The company offers communications systems-on-chip solutions worldwide. Its products include radio frequency, high-performance analog, mixed signal, digital signal processing, security engines, data compression and networking layers, and power management. The company’s products are used in a variety of electronic devices, including radio transceivers and modems for 4G/5G base-station and backhaul infrastructure, optical transceivers for hyperscale data centers, Wi-Fi and wireline routers for home networking, broadband modems that comply with data over cable service interface specifications, passive optical fiber standards, and digital subscriber lines, and power management and interface products. They sell to electronics wholesalers, module makers, original equipment manufacturers, and original design manufacturers via a direct sales staff, third-party sales representatives, and a distributor network.
Kishore Seendripu, Ph.D., is a co-founder and has held the positions of Chairman, President, and CEO since the company’s founding in September 2003. Dr. Seendripu also serves as director. From 1996 to 2002, Dr. Seendripu worked in engineering and management at Rockwell Semiconductor Systems, Broadcom Corporation, and Silicon Wave, Inc., creating radio frequency systems-on-chip solutions for wireless and broadband communication systems and devices. From 1990 to 1992, Dr. Seendripu worked as a graduate student research assistant at the Lawrence Berkeley National Laboratory. Dr. Seendripu holds an M.S. in Materials Sciences Engineering and a Ph.D. in Electrical Engineering from the University of California, Berkeley, a B.Tech. from the Indian Institute of Technology in Bombay, India, and an M.B.A. from the Wharton School at the University of Pennsylvania.
Opinion: According to Post on the Fly Benchmark analyst David Williams lowered the firm’s price target on MaxLinear to $22 from $28 and keeps a Buy rating on the shares. The company “extended its track record of disappointment once again this quarter” as the anticipated revenue trough in Q1 failed to materialize and is now nowhere in sight, says the analyst, who expresses renewed concern in execution as visibility challenges “continue to plague the firm.” However, the firm keeps its Buy rating as after enduring a 72% revenue decline, Benchmark believes “the worst is over, and growth will return as new product ramps begin to meaningfully contribute,” the analyst added.
Name: Liberty 77 Capital L.P. / Liberty 77 Fund International L.P. / STM Partners LLC / Steven T Mnuchin
Position: 10% Owner
Transaction Date: 2024-07-26 Shares Bought: 385,831 Average Price Paid: $8.50 Cost: $3,278,206
Company: Lions Gate Entertainment Corp (LGF)
Lions Gate Entertainment Corporation was created in 1986, and its headquarters are in Santa Monica, California. Lions Gate Entertainment Corp. is active in the film, television, subscription, and location-based entertainment industries in the United States, Canada, and throughout the world. The corporation is structured into three business units: film, television production, and media networks. The Motion Picture division develops and produces feature films, acquires North American and global distribution rights, distributes North American feature films to theaters, home entertainment, and television, and licenses global distribution rights. Television Production creates, produces, and distributes series, films, miniseries, and nonfiction programs worldwide. Media Networks markets STARZ-branded premium subscription video services locally and internationally through 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 Liberty Strategic Capital’s founder and managing partner, as well as the chair of the Investment Committee. Mr. Mnuchin formerly served as the 77th Secretary of the Treasury, holding the position from February 2017 to January 2021. Mr. Mnuchin oversaw the US Treasury’s efforts to preserve a strong economy, encourage economic growth, and generate job opportunities by creating conditions conducive to success both at home and abroad. Mr. Mnuchin also oversaw cybersecurity for the financial services industry and all Treasury divisions, including the IRS. Before being confirmed, he created, chaired, and directed Dune Capital Management. He formed OneWest Bank Group LLC and served as its Chairman and CEO until it 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, responsible for the firm’s global information and technology strategy and operations. Secretary Mnuchin received a bachelor’s degree from Yale University.
Opinion: I say he buys 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.
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Prosperous Trading,
