Insomniac Hedge Fund Guy

Another Roller Coaster Week on the Coronavirus Train- Insider Buying is Picking Up

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The headlines don’t stop. Most of them scary and getting worse by the day. That didn’t stop insiders from buying falling knives but not in the quantity I’m looking for to mark the all clear.  The pace of buying is clearly picking up, though IT SEEMS that Friday the 28th was the climax and insiders paused as the news headlines worsened about the virus.  In times of increasing investor panic, insiders will restore confidence, especially when they buy across the board. In this post, we examine insiders purchasing $200,000 of more of their company’s shares, looking for clues that may … Read more

What were insiders buying during this historic market sell-off?

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This was a week like none other- well, that’s not quite correct, a week like only 4 others in terms of market losses since 1945.  The Coronavirus put the stock market into intensive care. It remains to be seen if the general population follows it into the sick ward. The Dow  closed Friday, 357 points, or 1.4%, lower, on its seventh day in the red. At its worst, the index was down nearly 1,086 points. It dropped 3,583 points this week, including its worst one-day point drop in history on Thursday. On a percentage basis, Thursday’s 4.4% slump was the worst performance since … Read more

The Insiders Fund update and coronavirus thoughts

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Just wanted to update the partners and interested parties on recent events and market turmoil. As of yesterday the Fund was up about 2.88% for the month. These are unofficial numbers but highly reliable nonetheless. After today, I expect that gain will be gone.  The market is in the grips of a psychological panic caused by the coronavirus.  It doesn’t matter if this is justified or not, it just is. Particularly hard hit have been airlines which was our highest exposure as an industry group.  We have been reducing this exposure and as of the time of writing, we have … Read more

Notable Insider Buys Week Ending 2-14-20

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Avis got a new Chairman of the Board and he bought a lot of stock. Bernardo Hees, CEO of Kraft Heinz, bought 430,169  of CAR at $34.87.  That was his first purchase and it was a big one, $15 million.  It’s hard to say what the future is for the car rental companies with the gig economy, ride sharing, and autonomous vehicles. It’s not one we want to participate in, though. Chairman of the Board, Duncan, continues to amass significant shares of Enterprise Products Partners. Taken into perspective, this $5 million EPD buy represents a pittance of his vast holdings, … Read more

Amyris- what the heck? $AMRS Notable Insider Buys Week 2-7-20

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  Simply Good Foods’s SMPL Director Brian Ratzan bought 10,000 shares at $22.98.  The newly capitalized Atkins brands has found what seems to be permanent shelf space in grocery stores and drug store chains.  Insiders have had a steady diet of SMPL shares, the largest being the Chairman of the Board’s purchase of $1.7 million at back in November 2019 at $24.62 .  Atkins bars might be causing me indigestion, I had a followed his lead. The stock is down 17% on concerns over missing consensus growth expectations According to Fly on the Wall –“Goldman Sachs analyst Jason English added … Read more

Notable Insider Buys Week Ending 1-31-20 $ANTM Is our Pick of the Week

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Talk about a quiet week for insider buying.  Earnings season is in full swing and many insiders are on the sidelines due to earnings blackout, but this is ridiculous. Add to it the coronavirus pandemic and  no one is buying.  It can only mean one thing- insiders don’t find this market cheap or compelling. There are always notable exceptions. Our stand out this week is the CEO Gail Boudreaux’s $2 million buy of Anthem, the health care insurer, at $263.70 per share.  ANTM reported earnings on 1-29 and met expectations.  ANTM price target was lowered to $355 from $380 by … Read more

$AAL American Airlines Coronavirus has muted effect- revenue guaranteed by Boeing

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American Airlines has less Asia revenue than its’ peers UAL and Delta but has sold off even more. Considering that Boeing is reimbursing the airline for lost use of the 737 MAX this provides a built-in buffer.  American has been lagging its own projections because of a shortage of planes, not demand.  A demand hit caused by the virus is in part paid for by Boeing by virtue of the MAX grounding. American just reported great earnings even with significant operational challenges. CEO Parker on the recent earnings call said that American would have two year FREE cash flow of … Read more

Lovesac might be Love Shack -Insider Buying Week Ending 1-17-20

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We are hard pressed to find much opportunistic in this week’s insider buying reports unless you think 20,000 newly acquired shares of Lovesac by the Chairman might do anything to arrest this falling knife.   Then again it wouldn’t take much to enact a counter trend rally.  LOVE is exactly that kind of small-cap neglected name is making giant one day moves in this current state of the broader rally.  Their sectional sofa line, affectionally named Sactionals might just be the product that moves the stock higher.  The company reported 40% revenue growth on Jan 13th,  although yet unprofitable. One of … Read more

Notable Insider Buying Week Ending 1-10-20

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Not much happened in the world of insider buying last week. The vast majority of insiders are blacked out from buying or selling their stock during the period immediately before the release of 4th quarter earnings. The few that did make buys were hardly noticeable or worthy of exploring. The largest buyer last week was the CEO of Franchise Group Inc. FRG is the old Liberty Tax now focused on the evaluation and acquisition of franchise-oriented or complementary businesses. I spent some time researching this. It’s basically at this point a private equity company with a public stock they can … Read more

Notable Insider Buys Week ending Jan 3, 2020

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  Duncan is at it again, buying massive amounts, $6.8 million at an average price of $27.90, of midstream E&P company, Enterprise Products Partners, LP.  EPD yields a little over 6%. Next on the list is Director Omtvedt’s purchase of 40,000 shares of food conglomerate Conagra Brands at $33.99. This was particularly notable because not only did he more than double his holdings, this purchase was made after the stock rose 18% on a Q2 earnings beat and a higher than expected organic sales growth of 1.6%. This long time food industry executive has been a board member since 2016. … Read more

Notable Insider buys week ending 12-27-19

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  This was a holiday shortened week but insiders still managed to report a few buys. William Duncan continues to buy MLP Enterprise Products Partners, spending  $2.4 million at #27.88 Continuing along this theme of buying scorned midstream energy infrastructure assets, President Baker bought both KMF and KYN both Kayne Anderson Midstream Investment Funds.  We like this idea and would be buyers of this diversified ETF play on the entire sector. KMF is a closed-end energy fund investing in the midstream energy sector, including midstream MLPs and other energy companies.  As of Friday’s close the current yield is 8.3%. KYN invests in stocks … Read more

Notable Insider Buying Week Ending 12-20-19

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CB Duncan continues to amass sizable buys of Enterprise Products Partners, LP.  This midstream oil and gas operator  yields 6.29%. This seems like a buy in a low yield world but bear in mind, several MLPs  in this space yield double digits and have sizable insider buying as well. If you believe the combustion engine will be replaced by EVs in the next 10 years, don’t buy these MLPs. I for one don’t believe the market appreciates the complexity and cost of making lithium batteries. A director bought $1.28 million of peer Energy Transfer Partners at $12.79 per share, yielding … Read more

Notable Insider Buys Week Ending December 13, 2019 $SAGE Pick of the Week

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  Sage Therapeutics (SAGE) insiders seem to offer hope to long term investors. Sage Therapeutics reported disappointing phase 3 results on their major depressive disorder drug.  Insiders don’t seem deterred at all, buying over $4 million. The largest being Robichaud”s buy of 25,000 shares at $64.16.  Apparently the major depressive treatment options are so bleak that even poor results get approved by the FDA.   Sage is our pick of the week. Unfortunately its already up 10% from where insiders were buying.  Selling the near term $65 is the way we would play it now.  Stifel added it to its Select … Read more

Pick of the Week-Palo Alto Networks Insider Buying Week Ending December 6 2019 $PANW

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  It’s not often and I’m not even sure it’s advisable to buy a  wunderkind stock when it has a big sell off but we have to give the CEO of Palo Alto Networks credit for going big.  But then that’s how they roll in Silicon Valley.  Chairman of the Board, Aroram, bought $4.5 million of his stock when it stumbled? Is is a good buy, reasonable valuation?  Not hardly but that’s not how the game is played. That’s our pick of the week and former Jim Cramer favorite. The stock that worked though, is Expedia. We didn’t put enough … Read more

Notable Insider Buying Week 11-29-19

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  Shares of Karuna Therapeutics Inc. KRTX, more than tripled (up 254%) November 19th in active trading to an intraday high of $123.99 after a phase 2 trial of its schizophrenia treatment met its primary endpoint.  Karuna and its underwriters, led by Goldman Sachs et al, wasted no time rushing out a sport secondary at $96 raising $250 million. At Friday’s close of $71.88, people lost serious money in this secondary, including biotech VC and hedge fund Sofinnova Venture Partners which upped their position by$15 million.  No tears shed as they are early investors, buying $15 million on the IPO at … Read more

Notable Insider Buying Week Ending Nov. 22, 2019

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Please read the last paragraph before you invest.   Following insiders, although childishly simple and obvious of an idea, is fraught with danger.  You can lose money.  There are a lot of nuances to interpreting. For example, the significance of a billionaire buying $300,000 worth of stock is like the average person tippling the valet $5. It doesn’t mean much.  We try to grab the essence of an interesting buy with as few words as possible. Why does Aramark CEO buy $1.49 million of stock at $42.68? Perhaps he is jealous of seeing his Chairman of the Board make $1,000,000, 30% … Read more

Insider Buying Week Ending November 15, 2019

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As the earnings blackout period ends, there are a ton of interesting insider buys. We are going to analyze ALL of them that seem interesting, particularly the ones that look like they may have a good chart setup for profitable trades. Read on and find out what insiders are investing in. Hope springs in the oil patch.  Antero Resources Corp Director bought 178,000 shares at $2.79 for $496k substantially increasing his holdings by 266%.  Just about all the E&P companies are making new lows and I’d prefer to buy OXY with its outsized dividend. The irony here is that the … Read more

Notable Insider Buying Week Ending November 8-2019

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As a rule, we only look at material amounts of money, $200 thousand or more, as anything less could just be window dressing. The bar is different from selling because the natural state of management is to be sellers. This is because most companies provide significant amounts of management compensation packages as stock. Therefore, with selling, we analyze for unusual patterns, 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 … Read more

What’s Eating $Uber? -Massive Lock-Up Expiration, Lack of Earnings, Ill-defined Business Model?

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Something unusual will happen Wednesday Oct 6. Uber will have the biggest lock-up expiration in history.  RBC Capital Markets analyst Mark Mahaney estimates that 1.7 billion shares will become eligible for sale, roughly 90% of the total. I’ve heard amounts half of that. Either way its a monstrous amount. If you don’t know what a lock-up is, read this primer from front running broker, Light Speed. Uber reported earnings or more accurately lack of earnings Monday after the close. Nearly every firm on Wall Street recommended buying the stock 30% higher so I supposed they will recommend it with fained … Read more

Notable Insider Buying Week Ending November 1,2019

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It’s really quiet on the Western Front when it comes to insider buying.  American Airlines insiders continue to buy. James Clemmer CEO of AngioDynamics bought a small amount on a poor earnings showing. This might be window dressing. Richard Kinder keeps on amassing KMI.  Why not? If you were the billionaire namesake, you would know the 5% dividend is money in the bank. I like the Lilly buy. If you can grab stock near that price you will probably do well. FedEx is bold; the biggest director buy and the first for  board member Edwardson since 2008. As a rule, … Read more

Wright Medical $WMGI jumps after Bloomberg Says Exploring Potential Sale

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Wright Medical Group (WMGI) is working with financial advisers to explore a sale, Nabila Ahmed and Ed Hammond of Bloomberg reported last night, citing people familiar with the matter. The ankle joint implant maker rose 11% in after-hours trading Friday night to $24.45. The company has made no final decision and could still opt against a potential sale, sources told Bloomberg. Potential acquirers in the space include Stryker (SYK), Johnson & Johnson (JNJ) and Smith & Nephew (SNN), Ahmed and Hammond reported. I was reviewing our portfolio holdings after the market close on Friday, (embarrassingly counting the money on a … Read more

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The esteemed Ned Davis research letter might give The Insiders Fund an unexpected push toward the finish. As readers of our blog should know we’ve been pretty keen on the undervalued airline sector.  We especially like Delta here with its recent pullback in price.  We also own American Airlines and United Airlines.  We know we are in good company with Warren Buffett, Delta’s largest shareholder. I keep thinking he is going to buy Delta as one final hurrah.  That’s what an Investor Business Daily article said back in April. With the recent pullback, it might be more likely. The analyst, … Read more

High Conviction Trades- the Holly Grail of Investing

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It was George Soros that said, “there is no amount of money too big to bet when you know you are right.” It’s the holy grail of investing. The trade that we are all looking for.  One where we can leverage up and bet the farm.  It’s the time when you shove all the chips onto the table and tell the croupier you’re betting it all on 00. There is no investor with more conviction than a corporate insider betting big on his own company’s stock. https://theinsidersfund.com/inside-information Of course, betting the farm is the most dangerous type of behavior for an … Read more

Warning Insider Earnings Plays Can Be Hazardous to your Health Week 10-18-19

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WARNING- BUYING STOCKS BEFORE EARNINGS ANNOUNCEMENTS CAN BE ESPECIALLY RISKY. Stocks have outsized moves on earnings. We analyze these companies carefully where large insider buys might provide some insight. Insiders sell stock for many reasons, but they generally buy for just one – to make money. THE INSIDERS FUND invests in companies at or near prices that management has been willing to invest significant amounts of their own money in.  After all, who knows a business better than the people running it?  You’ve always heard the best information is inside information.  This is as close to “insider information” that an … Read more

Earnings Blackout or Insiders Backing Off? Roller Coast Week of October 4, 2019

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  The spike in insider buying that supported the brief rally in September has predictably collapsed in part because earnings blackout has begun, but equally important insiders buy their own company’s stock when they perceive it to be cheap.  There was a pickup in buying during the summer as the market stalled and pulled back. Note the yellow highlight on the red graph. Ulta Beauty’s major shareholder and Channel family advisor, Charles Heibroon bought $58.9 million of the beauty chain company, Ulta Beauty.  Ulta took a dump on August 30th, dropping $100 in price, losing almost a third of its … Read more

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Grounding of Boeing’s MAX plane, labor troubles, and recession fears have haunted shares of American Airlines this year. But some investors are betting that the worst is over and the shares could climb higher in 2020. Source: Shares of American Airlines Could Be Ready for Takeoff After a Very Bad Year – Barron’s American Airlines has been one of our core holdings most of the year.  We were up a significant amount but watched all of our profits disintegrate and turn to losses.   We traded Delta and United very profitably but American just seemed too cheap to trade. We were … Read more

Value Stocks Beckon Investors in Aging Bull Market – WSJ

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The September assault on record levels is prompting many stock investors to shift toward value assets, which have trailed in recent years. Source: Value Stocks Beckon Investors in Aging Bull Market – WSJ The Rotation from Value into Growth May Have Much Further to Run.  According to J.P. Morgan, the recent ” rotation into Value from Momentum/Low Vol that began ..was one of the largest 3-day Momentum-Value rotations in over 30 years (99.8%-ile), and will have much further to run. We find this exhilarating as value investing is basically what The Insiders Fund does as there is no better value buyer than the corporate … Read more

As Buffett Laments Kraft Heinz purchase, his Partner ,Jorge Buys $100 million -Notable Insider Buys Week Ending Sept 20,2019

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Kraft Heinz insider buying dwarfs all others.  While everyone is lamenting the purchase, including Warren Buffett who in a rare error stated publicly that he overpaid for Kraft Heinz, his partner in the deal, Jorge Lemann, buys a $100 million worth of the depressed stock.  Jorge didn’t get to be the 36th richest person in the world according to Forbes, by being stupid. Of course, that is pocket change for Mr. Lemann but the $7 million by van Damme is not. One of the things you have to analyze in insider buying is the significance and meaningfulness of the buy. … Read more

Coty Insiders Get Serious Again- How Long can it Remain Public?

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It’s only going to get duller from here as we head into 3rd quarter earnings season blackout. With the trade war on hold until October and most insiders blacked out from buying pre-earnings release, there won’t be much to be learned from the insiders’ tea leaves. After the most buying all year, the market responded by rallying sharply. Now insiders have retreated with few exceptions.  They are Coty, the giant cosmetics company controlled by European investment firm JAB Ltd. Coty has struggled with weak sales and executive turnover. On July 19th, the company said it will restructure its operations and … Read more

Notable Insider Activity Week Ending 8-31-19

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You have to love investors that put their money where their shareholders are. None are better than this than Richard Kinder, pipeline magnate. He bought almost $8 million of his namesake company, Kinder Morgan.  The 5% dividend yield looks both juicy and secure. Las Vegas Station Casino owner continues to pile into Red Rock Resorts. Maybe he hasn’t heard that a recession is on the way. Dish shareholders continue to bet the farm on the license spectrum and their highly risky and leveraged 5G buildout. 5G cellular is supposed to change everything and no doubt it will change Dish. Wayfair … Read more