It’s no secret Trump loves the farmers. It’s also no secret his trade war with China is killing them too. That’s why we are buying Archer Daniels Midland.  Bioethanol, corn and the feedstocks for it are big business for the farm industry.  Trump is stalling on extending refinery biofuel credits this year in a reversal of his palsy-walsy reversal of his 2016  election payback to Carl Icahn. Rember Icahn was his big and early financial street cred backer in the run-up to the election.  Icahn also lobbied hard to have them reduced so his refinery CVR Energy could get out from underneath the financial burden caused by them.  Wind the clock forward and the farm industry is now pissed and Trump needs them and thus we need more biofuel.  No irony lost that the farm states will get their credits and Trump will claim how he is saving the environment. I could go on but hopefully, you’ll get the drift.

When two insiders at Archer Daniel Midland (ADM) bought stock in ADM in April, I just scratched my head. The Chairman bought $1 million worth at $42.30. That’s not chicken feed. (sorry couldn’t help myself) In fact, they were the largest purchases on record by these insiders going back to 2011. What are they thinking? Business sucks, farmers are going broke, crop prices are all depressed.  Three days earlier the company said it was considering spinning off the ethanol business as profits were expected to be down 40%.  Perhaps they were thinking Trump would end the trade war with a deal from China.  Now that he hasn’t perhaps he will rescue them anyway as the Wall Street Journal reported on June 18th “The Trump administration is looking to make further changes to ethanol rules after the president heard from farmers during a recent trip to Iowa that an initiative to boost sales of the corn-based fuel additive didn’t go far enough, according to people familiar with the matter.

Possible remedies could include limiting waivers that help small oil refiners get around mandates that they blend plant-based fuels into gasoline and diesel, these people said. They cautioned that no decisions have been made.”


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 ordinary investor is likely to see- and it’s entirely legal.  Officers, directors, and 10% owners are required to inform the public through a Form 4 Filing any transaction, buy, sell, exercise, or any other with 48 hours of doing so. This info is available for free from the SEC’s Web site, Edgar, although we subscribe to the Washington Service as they provide a way to manage and make sense of the vast realms of data.

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 referred to as Rule 10b5-1 is horrendously poor.  I also generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and perhaps not the smart money we are trying to read the tea leaves on.

Of course, unintuitive as it may seem, insiders can also be wrong about their Company’s prospects, they can easily be wrong about how much others will value them, and in many cases, maybe most cases have no more idea what the future may hold than  you or I. In short, you can lose money following them.  We have and we curse aloud, what were they thinking!  Needless to say, past good fortune is no guarantee of future success.  We may own positions, long or short, in any of these names and are under no obligation to disclose that. We welcome your comments on our analysis.

This blog is solely for educational purposes and the author’s own amusement.  Investing with The Insiders Fund is for qualified investors and by Prospectus only. Nothing herein should be construed otherwise.  To learn more about our strategy, visit our website.

If you would like to hear more about how you can get involved with the Insiders Fund, please schedule some time on my calendar.