Not much in the quantity but interesting buying.l7u./8I 10% shareholders adjust their holdings frequently and may not really be privy to inside information unless they re very activek 8,i9.io/0-“+in day to day management.  What we are looking for is more likely found in the tea leaves of purchases of interest by directors and officers of any companies.

Buys

KMI Kinder Morgan  Founder and Chairman of the Board, Richard Kinder, purchased $17.5 million at an average price of $18.11.  These purchases were made near a 52 week high which makes them unusual as insiders tend to buy closer to a 52 week low than its high. Kinder Morgan, Inc. operates as an energy infrastructure company in North America. It operates through Natural Gas Pipelines, CO2, Terminals, Products Pipelines, and Kinder Morgan Canada segments.  At current levels, KMI yields a 4.45% dividend paid quarterly.

ADM Archer Daniels Midland Director Felsinger bought 60,000 at $41.80.He has been an Independent Director at Archer-Daniels-Midland Company since August 2009 and serves as its Lead Independent Director. This is the first stock purchase by Felsinger so this is pretty notable.

Stifel analyst Vincent Anderson upgraded Archer Daniels Midland to Buy while lowering his price target for the shares to $52 from $55. The stock at current levels largely price in the company’s tough comps in soybean crush margins while undervaluing its potential earnings growth from “controllables” as the company shifts its focus to digesting recent acquisitions, Anderson tells investors in a research note. Further, Archer Daniels shares currently trade at the low end of their historical forward price-to-earnings range and trailing 52-week share price range, adds the analyst. He sees the upside potential of around 23%. Perhaps this is the rationale for Felsinger’s first every open market purchase.

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States and internationally. It operates through four segments: Carbohydrate Solutions, Nutrition, Oilseeds, and Origination.

POST  Post Holding’s Chairman Strinz bought $13 million worth of POST at $96.71.   POST has increased in value by 263% since 2012 while peer competitor Kellogg has only risen 12.4%. By most measures such as dividend yield, free cash flow and P.E ratios. Kellogg looks more undervalued by than POST yet POST has been making money for investors, while Kellogg mostly losing it in the last 52 weeks. I wish I had a better explanation for the market valuation.  Instead, I’ll share three excerpts I found on FlyontheWall.

SunTrust analyst William Chappell raised his price target on Post Holdings to $115 and kept his Buy rating after its better than expected Q1 results and raised FY19 guidance. The analyst expects the company to continue to produce “in-line to better results for the remainder of the year”, with additional upside coming from unlocked shareholder value driven by the expected Active Nutrition public offering some time this year.

Wells Fargo analyst John Baumgartner raised his price target for Post Holdings to $120 from $114 following a big Q1 EBITDA beat on revenue. The analyst reiterates an Outperform rating on the shares. 

JPMorgan analyst Ken Goldman lowered his price target for Kellogg to $56 following the company’s “low-quality” Q4 earnings beat and 2019 earnings guidance that came in well below the Street. The analyst says that until he sees an indication that margin erosion is waning, “it is prudent to model conservatively.” He keeps a Neutral rating on Kellogg.

I think the stock is running because in November in 2018 Post announced a spin-off of 20% of its Active Nutrition business which is mostly PowerBar. Perhaps the analysts are cozying up because they want part of the lucrative underwriting fees from the PowerBar IPO. (oh they haven’t actually called it PowerBar yet)

The bottom line, I think both Kellogg and Post could be work on the long side although only Post has made investors money. The bar for success seems sufficiently low if a brand like PowerBar can IPO; given enough time the folks at Kellogg can find a “powerbar or something” from their staple of brands and consumer products.

 

T AT&T Director Yang bought $ 1million worth of underperforming Ma Bell at $29.75.  AT&T has been cratering mostly during the last 12 months so have no idea what he is seeing but I am seeing a dividend near 7%. That might be high even for this heavily indebted wireless carrier but it’s hard to say, perhaps it’s a free card on the 5G bonanza everyone says is coming. 5g Wireless with its superabundant bandwidth (Verizon is already offering a wifi hub in select markets with a 250GB download. We really like this play and it would totally change the sentiment toward T and transform it into a growth machine again.

JPM JPM Morgan Director Crown who already owns $1.5 BILLION of JP Morgan bought a paltry $500k more at an average price of $103.79.  My only question is when does CEO Jamie Dimon buy?  That’s when I’m back in.

 

Sales

 

Insiders always find ways to sell with their so-called “planned sales” which in reality is just a legal loophole around the SEC restrictions on insider selling during earnings blackout periods.  Some of the more notable ones are described below.

TXN Texas Instruments insiders certainly took advantage of the pop up in price after earnings to unload $22.8 million at prices ranging from $101 to $106.

CRM Salesforce 7 insiders unloaded $21.7 million worth of stock.  CRM is always full of sellers so there is nothing really out of the ordinary other than this is one of the most overpriced and one of the most easily replaced business software.  CRM’s have blossomed and there are now several cheaper, easier to use, and with better support, you don’t have to pay additional for.

 

The list of sellers is long; Centene, Este Lauder, Vertex Pharmaceuticals, BJ Wholesale Clu, Kirby, Blackrock Enhanced dividend, Navistar, McDonald’s, NVR, Smartsheet, and the list goes on.

 

In this report, we examined open market purchases from employees and directors.  Insiders sell stock for many reasons, but they generally buy for just one – to make money.  As a standard, 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. We generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and not the SMART money we are trying to go to school on.  Although this info is available for free from the SEC’s Web site, Edgar, we subscribe to the Washington Service as they provide a way to manage and make sense of the vast realms of data.

To learn more about our strategy, visit our website here. We welcome your comments on our analysis. We may own positions, long or short, in any of these names and are under no obligation to disclose that.