The stock market had its best week since November 2023, immediately after its worst week of the year. The market is now spitting distance from where it ended the month of August. Lately, the market has been on a merry-go-round. Trading is killing buy-and-hold, but one week, two weeks, or even two years doesn’t make great hedge fund managers or investors wizards. It’s fun when you win, and it beats watching network TV in a swing state these days. They said it all comes down to the 500,000 undecided voters in the seven states that will determine the Presidential election this year. Dollars to donuts, most of them won’t even vote.
This week, we will work to uncover the motives behind significant insider buys. If you think they are all opportunistic, betting on their company’s stock going up, think again. Insider buying is like reading tea leaves; people don’t always act on what you think is in their self-interest. They may have a different agenda than greed, perhaps keeping their job, taking a bullet for the team by buying poor-performing stock for the morale of the employees and shareholders, or having mandatory stock purchase plans. It’s complicated, you see. We try to pick through the morass and find the actionable ideas.
Name: Judith Mchale
Position: Director
Transaction Date: 2024-09-10 Shares Bought: 4,750 Average Price Paid: $210.81 Cost: $1,001,361
Company: Hilton Worldwide Holdings Inc. (HLT)
Hilton Worldwide Holdings, Inc. was formed in 1919 and is headquartered in McLean, Virginia. Hilton Worldwide Holdings Inc., a hospitality firm, manages, franchises, owns, and leases hotels and resorts. It operates in two segments: management franchise, and ownership. The corporation manages hotels and licenses its brands. It operates luxury hotels under the Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, and Conrad Hotels & Resorts brands; lifestyle hotels under the Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton, and Motto by Hilton brand; full-service hotels under the Signia by Hilton, Hilton Hotels & Resorts, and DoubleTree by Hilton brand; service hotels under the Hilton Garden Inn, Hampton by Hilton, and Tru by Hilton brands; all-suite. The corporation operates in North America, South America, and Central America, including several Caribbean countries; Europe, the Middle East, and Africa; and Asia Pacific.
Judith A. McHale has been an independent director of Hilton Worldwide Holdings, Inc. since 2013 and Paramount Global since 2019. She has been the President and Chief Executive Officer of Cane Investments LLC since 2011. Dr. McHale formerly served as President and Chief Executive Officer of Discovery Communications LLC from 2004 until 2006. She was also a Director at Host Marriott Corp., Potomac Electric Power Co., Ralph Lauren Corp., John Hancock Financial Services, Inc., Maxar Intelligence, Inc., Pepco Holdings LLC, Yellow Pages Ltd., United Parks & Resorts, Inc., Host Hotels & Resorts, Inc., Heart Foundation, Vital Voices Global Partnership, Inc., The Africa Society, Inc., Sister to Sister: Everyone Has A Heart Foundation, Inc., The Plainville Electrical Products Co., Park Hotels & Resorts, Inc., YPG Fin Dr. McHale also served as an independent director of Viacom, Inc. from 2016 to 2019. Dr. McHale earned an undergraduate degree from the University of Nottingham and a graduate degree from Fordham University School of Law.
Opinion: Buying stock near the top of the recent price range is bullish. Even in corporate purchase agreements, insiders have great leeway when they buy company stock. This is not a small buy from a long-term director. Considering it’s her first recorded open-market purchase, it’s particularly notable. Stock is up $13 from where she purchased it as of last Friday’s close. Hilton has been putting up really good numbers and growing the top and bottom lines, while Airbnb is struggling and Booking is just getting by even though both show double-digit revenue growth. Could the Hilton customer be older, not as economically impacted by the current high inflation and job market, and more likely retired and with a relaxing stock portfolio and high-paying interest bonds? Seems like knowing how to run a business profitably does count for something.
Name: Bernard Jr Lanigan
Position: Director
Transaction Date: 2024-09-09 Shares Bought: 75,000 Average Price Paid: $26.81 Cost: $2,010,750
Company: CNX Resources Corp (CNX)
CNX Resources Corporation was founded in 1860, and its headquarters are in Canonsburg, Pennsylvania. CNX Resources Corporation is an independent natural gas and midstream company that focuses on the acquisition, exploration, development, and production of natural gas properties in the Appalachian Basin. The company operates in two segments: shale and coalbed methane (CBM). It produces and sells pipeline-grade natural gas, primarily to gas wholesalers. The corporation can harvest natural gas from shale properties in Pennsylvania, West Virginia, and Ohio, as well as other shale and shallow oil and gas reserves in Illinois, Indiana, New York, and Virginia. Furthermore, the company designs, builds, and operates natural gas gathering systems that transport gas from the wellhead to interstate pipelines or other local sales points; it owns and operates approximately 2,600 miles of natural gas gathering pipelines as well as several natural gas processing facilities.
Bernard Lanigan, Jr. joined the CNX board in May 2016. Mr. Lanigan currently chairs the Audit Committee and serves on the ESCR and NCG committees. He co-founded Southeast Asset Advisors, Inc., an investment advisory and wealth management organization, and has been Chairman and CEO since 1991. He also co-founded Lanigan & Associates, P.C., a certified public accounting and consulting firm, and has been chairman since 1974. He also sits on the boards of non-profit corporations, endowments, and private groups. Mr. Lanigan has previously served on the boards of directors for Texas Industries, Inc., Rayonier, Inc., and Ruby Tuesday. Mr. Lanigan joins our Board with more than four decades of experience operating large, complex, and diverse organizations. He is a certified public accountant with over 40 years of experience in financial, tax, accounting, investment advising, capital allocation, strategic consulting, risk assessment, valuations, and mergers and acquisitions. He has worked as an advisor and principal in various industries, including energy.
Opinion: This is a head-scratcher. Revenue and profits are down, the entire sector is down, but CNX is cooking on gas.
Key Financial Metrics
- Revenue: CNX’s revenue has shown fluctuations due to varying natural gas prices.
- Earnings: Earnings are expected to grow by 31.29% in the coming year7.
- Free Cash Flow: CNX has consistently generated free cash flow, marking its 16th consecutive quarter of positive free cash flow in Q4 20238.
Name: David A Handler
Position: Director
Transaction Date: 2023-09-10 Shares Bought: 10,000 Average Price Paid: $17.51 Cost: $175,100
Company: PENN Entertainment Inc. (PENN)
Penn Entertainment, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania. The company was known as Penn National Gaming, Inc. before changing its name to PENN Entertainment, Inc. in August 2022. PENN Entertainment, Inc. and its subsidiaries provide integrated entertainment, sports content, and casino gaming experiences. The company is organized into five segments: northeast, south, west, midwest, and interactive. It provides online sports betting in several jurisdictions, as well as iCasino under the brand names Hollywood Casino, L’Auberge, ESPN BET, and Score Bet Sportsbook and Casino. The company’s portfolio also includes PENN Play, a customer loyalty program that offers various prizes and experiences to business channels. It also owns several other trademarks and service marks, including Ameristar, Argosy, Boomtown, Hollywood Casino, Hollywood Gaming, L’Auberge, PENN Play, theScore, theScore Bet, theScore esports, and M Resort.
Mr. Handler has served as PENN Entertainment’s Board Chair since June 2019 and a director since 1994. Mr. Handler co-founded Tidal Partners in August 2022, focusing on M&A and strategic advisory services for the technology industry. Mr. Handler was a Partner and founder of Centerview Partners’ Technology Advisory Practice from August 2008 until August 2022. He was Managing Director of UBS Investment Bank from April 2006 to August 2008.
Opinion:
Name: Mark Lappe
Position: Chief Executive Officer
Transaction Date: 2024-09-06 Shares Bought: 44,000 Average Price Paid: $15.25 Cost: $671,150
Company: Inhibrx Biosciences Inc. (INBX)
Inhibrx Biosciences, Inc. was created in 2024 and is headquartered in La Jolla, California. The company is a clinical-stage biopharmaceutical company that creates biological therapeutics for patients with life-threatening disorders. INBRX-109, a tetravalent therapeutic candidate targeting death-receptor 5 that is in phase 2 clinical trial for the treatment of unresectable or metastatic conventional chondrosarcoma; and INBRX-106, a hexavalent sdAb-based therapeutic candidate targeting OX4 that is in phase 2 clinical trial for the treatment of metastatic solid tumor, non-small cell lung cancer, melanoma, head and neck cancer, gastric (GIST), and gastroesophageal adenocarcinoma (GEA) cancer, renal cell carcinoma, and urothelial (transitional) cell carcinoma.
Mr. Lappe co-founded Inhibrx in 2010 and has served as its CEO since its inception. He also serves as the chairman of our Board of Directors. Mr. Lappe has over 30 years of expertise in senior management, investment management, and executive recruiting, having built executive teams for more than 40 start-up biotechnology and medical device companies. Before founding Inhibrx, Mr. Lappe was the founder and Managing Partner of Efficacy Biotech Fund, which focused on strategic investments in publicly traded biotechnology companies.
Opinion: The intriguing thing is this is reminiscent of the Pfizer Biohaven deal. Sanofi completed its acquisition of SAR447537 (formerly INBRX-101) to Sanofi’s rare disease pipeline. SAR447537 is a human recombinant protein that holds the promise of allowing alpha-1 antitrypsin deficiency (AATD) patients to achieve normalization of serum AAT levels with less frequent (monthly vs. weekly) dosing. The acquisition was valued at approximately $1.7 billion, with former shareholders of Inhibrx receiving $30.00 per share in cash and one contingent value right per share to receive $5.00 upon achieving a regulatory milestone. Lappe and most of management stayed with the stubb stock and decided to further develop their pipeline.
Name: Richard A Baldridge
Position: Director
Transaction Date: 2023-09-12 Shares Bought: 55,000 Average Price Paid: $14.91 Cost: $820,000
Company: Viasat Inc (VSAT)
Viasat, Inc. was established in 1986 and is based in Carlsbad, California. Viasat, Inc. delivers broadband and communications products and services in the United States and around the world. The company operates in three business segments: satellite services, commercial networks, and government systems. The Satellite Services segment provides in-flight connectivity and wireless in-flight entertainment services for commercial aircraft and private jets; aviation software and narrowband safety and communications services; satellite-based fixed broadband services, including broadband internet access, voice over internet protocol, and other services; enterprise connectivity solutions; fixed broadband internet. The commercial Networks segment offers mobile satellite communication systems for aircraft, land-mobile, and seagoing vessels, fixed broadband satellite communication systems like satellite network infrastructure and ground terminals, antenna systems, and gateways for terrestrial and satellite customer applications. The Government Systems segment offers mobile and fixed broadband modems, terminals, network access control systems, mesh and hub-and-spoke satellite networking systems, secure networking, cybersecurity, and information assurance solutions.
Richard Baldridge has served as a director of Viasat since 2016. Mr. Baldridge joined Viasat in 1999 and has served as Executive Vice President, Chief Financial Officer, and Chief Operating Officer since 2000, Executive Vice President and Chief Operating Officer since 2002, and President and Chief Operating Officer since 2003. Mr. Baldridge served as President and CEO from November 2020 to July 2022, and Vice Chairman from July 2022 until his retirement in June 2023. Mr. Baldridge is also a director of Ducommun Incorporated, a provider of engineering and manufacturing services to the aerospace and military industries, as well as EvoNexus, a non-profit technology incubator situated in San Diego. Before joining Viasat, Mr. Baldridge was Vice President and General Manager of Raytheon Corporation’s Training Systems Division from 1998 to 1999. Mr. Baldridge was the Chief Operating Officer and Chief Financial Officer of Hughes Information Systems and Hughes Training Inc. from 1994 to 1997 before they were acquired by Raytheon. Mr. Baldridge earned a B.S.B.A. in Information Systems from New Mexico State University.
Opinion:
Name: Lawrence E Golub
Position: Chairman
Transaction Date: 2024-09-05 Shares Bought: 40,000 Average Price Paid: $14.85 Cost: $593,800
Company: Golub Capital Bdc Inc. (GBDC)
Golub Capital BDC, Inc. is a business development company that serves as an externally managed closed-end, non-diversified management investment vehicle. The organization invests in middle-market enterprises through debt and minority stock, which are frequently supported by private equity investors. It often invests in consumer services, including vehicles, healthcare technology, insurance, healthcare equipment and supplies, hotels, restaurants, entertainment, healthcare providers and services, IT services, and specialized retail. The corporation plans to invest in the United States. The company’s primary investments include first-lien traditional senior debt, first-lien one-stop, junior debt, equity, senior secured, one-stop, unitranche, second-lien, subordinated, and mezzanine loans from middle-market companies, and warrants.
Mr. Lawrence Golub has been Chairman of the Board of Directors since November 2009. He is also the CEO of Golub Capital and a member of GC Advisors LLC’s Investment Committee. Mr. Golub is currently on the Stanford Interdisciplinary Life Sciences Council and the Stanford Impact Labs Advisory Board. Mr. Golub formerly served as Managing Director of Bankers Trust Company. Before that, he was a Managing Director at Wasserstein Perella, where he helped the company build its capital markets and debt restructuring expertise. Mr. Golub began his career at Allen & Company Incorporated, where he specialized in private equity, leveraged financing, and mergers and acquisitions. For nearly twelve years, Mr. Golub served as a private member of New York’s Financial Control Board. He was the Chairman of Mosholu Preservation Corporation, a non-profit company that constructs and administers low-income housing in the Bronx. Mr. Golub received his AB magna cum laude in economics from Harvard College. He received an MBA from Harvard Business School.
Opinion: Another mezzanine yield play. I don’t understand why private company finance is such a hot button with P.E. firms when Golub has been doing this forever with liquidity.
Name: Thomas L Jr Carter
Position: CEO, President, and Chairman
Transaction Date: 2024-09-06 Shares Bought: 100,000 Average Price Paid: $14.12 Cost: $1,411,800
Company: Black Stone Minerals L.P. (BSM)
Black Stone Minerals, L.P. was founded in 1876 and is based in Houston, Texas. The corporation and its subsidiaries possess and manage oil and natural gas mineral interests. The corporation has mineral interests in about 16.8 million gross acres, nonparticipating royalty interests in 1.8 million gross acres, and overriding royalty interests in 1.6 million gross acres across 41 states in the United States.
Mr. Carter has been Chairman and Chief Executive Officer of the General Partner since November 2014. Mr. Carter was President of the General Partner from November 2014 until June 2018, returning in February 2023. Mr. Carter formed the predecessor, BSMC, and served as President, CEO, and Chairman of Black Stone Natural Resources, L.L.C., BSMC’s previous general partner, from 1998 to 2015. Mr. Carter was the Managing General Partner of W.T. Carter & Bro. from 1987 to 1992, and Black Stone Energy Company from 1980 to the present, both of which preceded the General Partner. Mr Carter established Black Stone Energy Company, BSMC’s operating and exploratory subsidiary, in 1980. Mr. Carter worked as a lending officer in the Energy Department of Texas Commerce Bank in Houston, Texas, from 1978 to 1980, after previously serving in a variety of different roles since 1975. Mr. Carter earned his M.B.A. and B.B.A. degrees from the University of Texas at Austin. Mr. Carter was a director of Carrizo Oil & Gas Inc. from 2005 to 2019.
Opinion: Royalty Trust Black Stone Minerals BSM is probing multi-year lows, and insiders are also buying there this week. The yield now hovers around 10.25%, which is pretty good considering rates are coming down. This variable yield is largely dependent on the royalty income the Trust derives from hydrocarbon leasehold and revenue sharing around the most profitable U.S. basins. It’s probably a good bet, with AI data centers gobbling up an enormous amount of natural gas and methane-generated electricity.
Name: William J Quinn
Position: Director
Transaction Date: 2023-09-10 Shares Bought: 312,429 Average Price Paid: $12.79 Cost: $3,994,821
Company: Permian Resources Corp (PR)
Permian Resources Corporation was established in 2015 and is based in Midland, Texas. Permian Resources Corporation, an independent oil and gas firm, is focused on developing crude oil and liquids-rich natural gas deposits in the United States. The company’s holdings are predominantly concentrated in the Delaware Basin, a subbasin of the Permian Basin. Its properties include acreage blocks in West Texas, Eddy County, Lea County, and New Mexico. The corporation was previously known as Centennial Resource Development, Inc., but changed its name to Permian Resources Corporation in September 2022.
Mr. Quinn has been a Director since September 2022. He is the founding and managing partner of Pearl Energy Investments. Mr. Quinn was the Managing Partner of Natural Gas Partners until starting Pearl in 2015. As Managing Partner, he co-managed NGP’s investment portfolio and participated actively in all aspects of the investing process. Mr. Quinn earned a B.S.E. in Finance with honors from the University of Pennsylvania’s Wharton School and an M.B.A. from Stanford’s Graduate School of Business.
Opinion: Buy low, sell high. This is usually how you make money in the stock market and the oil business. The Permian is the reason U.S oil production is growing. The Delaware Basin is the sweet spot in the Permian. Contrarian investors would do well to pay attention to this large bet. Quinn knows his stuff. He sold out over $650 million at ~$16. Now he’s buying back in at this depressed price.
Name: Liberty 77 Capital L.P. / Liberty 77 Fund International L.P. / STM Partners LLC / Steven T Mnuchin
Position: 10% Owner
Transaction Date: 2024-09-06 Shares Bought: 132,246 Average Price Paid: $6.74 Cost: $890,942
Company: Lions Gate Entertainment Corp (LGF-B)
Lions Gate Entertainment Corporation was founded in 1986, with its headquarters 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 divided into three business units: film, television production, and media networks. The Motion Picture branch creates and produces feature films, acquires North American and global distribution rights, distributes North American feature films in cinemas, home entertainment, and on television, and licenses global distribution rights. Television Production develops, produces, and distributes series, films, miniseries, and nonfiction programming globally. Media Networks offers STARZ-branded premium subscription video services both locally 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., also called Liberty Strategic Capital, is a private equity firm. The group mostly invests in technology firms. Liberty Strategic Capital serves clients throughout Washington. The firm, founded in 2021, is run by former Treasury Secretary Steven T. Mnuchin.
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 firm, has indirect authority over both 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 chairman of the Investment Committee. Mr. Mnuchin was the 77th Secretary of the Treasury, serving from February 2017 until January 2021. Mr. Mnuchin managed the US Treasury’s efforts to maintain a robust economy, promote economic growth, and create job opportunities by setting circumstances for success both domestically and internationally. Mr. Mnuchin was also responsible for cybersecurity in the financial services industry and all Treasury divisions, including the IRS. Before being confirmed, he founded, chaired, and operated Dune Capital Management. He founded OneWest Bank Group LLC and served as Chairman and CEO until it was sold to CIT Group Inc. Secretary Mnuchin previously worked as a Partner and Chief Information Officer at The Goldman Sachs Group, Inc., where he oversaw the firm’s global information and technology strategy and operations. Secretary Mnuchin has a bachelor’s degree from Yale University.
Opinion: Every week, former Treasurer Secretary Mnuchin buys in. He’s got the Hollywood bug, and I’m sure he’s trying to figure out how to swallow the whole kaboodle.
Name: John F Barry
Position: Chief Executive Officer / 10% Owner
Transaction Date: 2024-09-05 Shares Bought: 218,957 Average Price Paid: $5.26 Cost: $1,151,283
Transaction Date: 2024-09-04 Shares Bought: 750,000 Average Price Paid: $5.23 Cost: $3,922,500
Company: Prospect Capital Corp (PSEC)
Prospect Capital Corporation is a business development corporation. The company focuses on middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnarounds, growth capital, development, capital expenditures, and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending, and bridge transactions. It also makes real estate investments, mostly in the multi-family residential asset class. The fund invests in secured debt, senior debt, senior and secured term loans, unitranche debt, first and second lien, private debt, private equity, mezzanine financing, and equity in private and microcap public companies. It specializes in both primary and secondary loans/portfolios and invests in debt financings for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, and real estate financings/investments. The fund typically invests in various industries, with a focus on energy and industry.
John Francis Barry is the Chairman and Chief Executive Officer of Prospect Capital Corp., Prospect Capital Management LP, Prospect Credit Corp., Prospect Administration LLC, and PCM Co. He is currently the Chairman and Chief Executive Officer of Priority Senior Secured Income Management LLC. Mr. Barry previously served as the Chairman and CEO of BondNet Trading Systems, Inc. and Prospect Flexible Income Management, LLC. He also served as Chairman of the Mathematics Foundation of America from 1999 to 2011. In addition, he served as a Director at Yatesville Coal Holdings, Inc., a Founding Member-Project Finance Group at Merrill Lynch & Co., Inc. from 1983 to 1988, an Advisor at Centrus Energy Corp., a Corporate Securities Attorney at Davis Polk & Wardwell LLP from 1979 to 1983, and a Principal at L.F. Rothschild & Co., Inc. in 1989. Mr. Barry earned his undergraduate degree at Princeton University in 1974 and his professional degree from Harvard Law School in 1978.
Opinion: Another private mezzanine company lender. When you see herd buying in a group, it’s probably a good insider buying indicator.
Name: Warren B Kanders
Position: Executive Chairman / 10% Owner
Transaction Date: 2024-09-06 Shares Bought: 280,000 Average Price Paid: $4.14 Cost: $1,160,034
Company: Clarus Corp (CLAR)
Clarus Corporation was founded in 1957 and is based in Salt Lake City, Utah. Clarus Corporation designs, develops, manufactures, and distributes outdoor and lifestyle goods in the United States and around the world. Outdoor and Adventure are the company’s two business segments. Outdoor apparel includes shells, insulation, mid layers, pants, and logo wear; rock-climbing footwear and equipment such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear; technical backpacks and day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skis, ski poles, ski skins, avalanche airbag systems, avalanche transceivers, shovels, and probes. This section sells equipment for climbing, mountaineering, trail running, camping, skiing, and other outdoor activities under the Black Diamond Equipment and PIEPS brands. The Adventure segment provides engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards, and accessories under the Rhino-Rack brand; overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market under the MAXTRAX brand; and overlanding and off-road vehicle sales and retail under the TRED brand.
Warren B. Kanders, the Executive Chairman, has been a director since June 2002, and the Executive Chairman of the Board of Directors since December 2002. Mr. Kanders has been President of Kanders & Company, Inc. since 1990, a private investment corporation he owns and controls that invests in and consults for public and private entities. From January 1996 until its sale to BAE Systems plc on July 31, 2007, Mr. Kanders was Chairman of the Board of Directors and Chief Executive Officer of Armor Holdings, Inc., a former New York Stock Exchange-listed company that manufactures and supplies military vehicles, armored vehicles, and safety and survivability products and systems to the aerospace and defense, public safety, homeland security, and commercial markets. Mr. Kanders holds an A.B. degree in Economics from Brown University.
Opinion: Black Diamond is a legendary climbing and backcountry skiing brand. I’d circle this one for some risk capital.
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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,
