Three weeks with almost no insider buying of any note to reports. We ignore the purchases of hedge funds as they may be investing primarily with other people’s money. Instead, we concentrate on officers and directors of a company who spend what we think are respectable amounts of money, not likely to be window dressing. Like everything thing in investing, this is not a firm rule. Investors rarely ignored Warren Buffett’s Berkshire Hathaway, Bill Ackman, or other legendary hedge fund investors.
This week, we highlight one new buy and three names we have previously written about.
Name: Chun R Ding
Position: 10% Owner
Transaction Date: 2023-10-01 Shares Bought: 78,829 Average Price Paid: $13.00 Cost: $1,024,698
Company: GRAIL Inc. (GRAIL)
GRAIL, Inc., a biotechnology business, specializes in creating solutions for early cancer detection. The company creates Galleri, a screening test for asymptomatic people over the age of 50, and DAC, a diagnostic aid for cancer tests that speeds up diagnostic resolution for patients with a clinical suspicion of cancer. It also creates minimum residual disease and other post-diagnostic examinations. The company was established in 2015 and is headquartered in Menlo Park, California. GRAIL, Inc. is a former subsidiary of Illumina, Inc.
Mr. Chun Ding is the Founder and Managing Director of CRCM LLC, a Manager at CRCM LP, and a Managing Partner at ChinaRock Capital Management Ltd. He serves on the Board of Directors for Lit Live, Inc. and PolySign, Inc. Mr. Ding has previously worked as an Independent Director at Link Motion, Inc., a Non-Executive Director at China.com, Inc., a Managing Member at Farallon Capital Management LLC, a Managing Director at Chinarock Capital Management Ltd. (Investment Management), and a Principal at City Investing Co. Liquidating Trust. He earned an undergraduate degree from Middlebury College and an MBA from Harvard Business School.
Opinion: Grail appears to be significantly undervalued, offering a potential opportunity for a 20-fold increase or more. When Carl Icahn sued Illumina over the Grail acquistion, it was the arrogance to close the purchase without EU and FTC approval, not the company’s $8 billion price tag that was the most offensive. The Galleri test could become the most valuable diagnostic tool globally with FDA approval or an endorsement from Great Britain’s National Health Service. Recent developments include an investment manager, CRCM, filing for a stake exceeding 10% in the company. Given that CRCM’s largest publicly filed investments have been in bitcoin and gold, this move is certainly an unconventional strategy.
An active contributor on X, @even, when asked if he knew of any cigar butt stocks like Charlie Munger would talk about, he cited Grail.
Name: John T McGinnis
Position: EVP, CFO
Transaction Date: 2023-10-23 Shares Bought: 8,000 Average Price Paid: $62.28 Cost: $498,240
Company: ManpowerGroup Inc. (MAN)
ManpowerGroup Inc. is a prominent global workforce solutions provider, offering services such as recruitment and assessment, training and development, consulting, outsourcing, and career management. Operating under brands like Manpower, Experis, Right Management, and ManpowerGroup Solutions, the company caters to diverse sectors including construction, IT, engineering, finance, and healthcare.
Jack McGinnis was appointed Executive Vice President and Chief Financial Officer in February 2016. As CFO, he oversees ManpowerGroup’s global finance, internal audit, enterprise risk, information security and privacy, and strategic sourcing activities. As a member of ManpowerGroup’s Executive Leadership Team, McGinnis is responsible for supporting and advancing the company’s business and finance initiatives, as well as driving operational excellence across all geographies and business lines. McGinnis joined ManpowerGroup from Morgan Stanley, where he was the Global Controller in charge of financial accounting and controls, SEC and regulatory reporting, financial planning and analysis, and the finance unit for the company’s main US bank. He formerly worked as CFO for HSBC North America Holdings Inc. and was a Partner at Ernst & Young. McGinnis graduated from Loyola University Chicago with a degree in business administration in public accounting.
Opinion: Manpower shares dropped sharply after reporting a weaker-than-expected 4th quarter earnings forecast. It’s hard to get excited about MAN, but the CFO purchase is one of the strongest buying signals we consider.
Name: Liberty 77 Capital L.P. / Liberty 77 Fund International L.P. / STM Partners LLC / Steven T Mnuchin
Position: 10% Owner
Transaction Date: 2024-10-21 Shares Bought: 646,080 Average Price Paid: $6.73 Cost: $4,347,082
Company: Lions Gate Entertainment Corp (LGF-B)
Lions Gate Entertainment Corporation was created in 1986 and has its headquarters in Santa Monica, California. Lions Gate Entertainment Corp. competes in the film, television, subscription, and location-based entertainment markets in the United States, Canada, and worldwide. The corporation is organized into three business units: film, television production, and media networks. The Motion Picture branch 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 sells STARZ-branded premium subscription video services domestically 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., also known as Liberty Strategic Capital, operates as a private equity firm. The corporation mostly invests in technological businesses. Liberty Strategic Capital serves clients throughout Washington. The firm was founded in 2021 and is led by Steven T. Mnuchin, a former Secretary of the Treasury.
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 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: Steven Mnuchin, often not viewed as an insider, has been steadily increasing his stake in Lions Gate through Liberty Capital. With his Hollywood and filmmaking background, Mnuchin was a significant player in the industry through RatPac-Dune Entertainment before his tenure as U.S. Treasury Secretary. His company funded major films like “The Lego Movie,” “Mad Max: Fury Road,” “American Sniper,” and “Suicide Squad.” Although these investments haven’t elevated the stock price, there’s anticipation that his Liberty Capital group may eventually take over the esteemed film company.
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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,
