Site icon The Insiders Fund

Three of our Portfolio Stocks in The Insiders Fund were Discussed in this Week’s Barron’s

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 wrong about that.

Insiders have been sizeable buyers of AAL. Directors and Officers have bought about $ 4million of stock, almost all at higher prices this year.

Source: Biotech Roundtable: How to Invest in Medicine’s Future

We own two of the roundtable’s picks.  Shares of Sarepta Therapeutics (SRPT) and Tricida (TCDA) have seen significant insider buying this year.

According to Wang, who is head of Barclays biotech research, “Sarepta Therapeutics [SRPT] is another gene-therapy company we like. The stock is out of favor, having fallen on negative news. Sarepta focuses on treatments for Duchenne muscular dystrophy. The patient population is meaningful, at 13,000 to 18,000 in the U.S. There is only one treatment now, which isn’t very good. Sarepta has shown initial proof of concept for its microdystrophin gene therapy with four patients. Pfizer has a competing program, and its initial data have independently validated that approach. Near term, Sarepta doesn’t have too many catalysts, but we see upside longer-term before the company releases important data in the second half of 2020.”

It may not have near term catalysts but insiders are aggressively buying Sarepta. In August, the CEO added $2 million at $123.07 to his holdings. Director Barry added $1.1 million at $110.91.  Then in September two directors and the Chairman of the Board bought another $830k. The Chairman also exercised 5000 shares at a cost os just $39k without an offsetting sale to pay the sizeable  capital gains due, another very bullish sign. Friday’s close of $75.50 looks cheap.

Tricida was recommended by Ziad Bakri, the Portfolio Manager T. Rowe Price Health Sciences Fund. Accordingly, “Tricida [TCDA] is an off-the-radar company focusing on a drug for kidney disease. It is using an older polymer technology approved in other diseases to soak up hydrogen ions, which makes kidney-disease patients less acidotic. Tricida’s drug application has been filed with the FDA, and the drug could be approved next year. There are a lot of data indicating that if you improve the acidosis [reduce the level of acid in the blood] of these patients, you will affect the course of the disease in a positive way. Tricida has a market cap of about $1.7 billion.”
The insider activity on TCDA has not been as bullish as SRPT but the price action is better. The CFO Geoffrey Parker bought $1million worth of stock back in August at $32.233. Tricida closed last Friday at $31.22.

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

#stock #market #money #bitcoin #business #forex #marketing #binaryoptions #wallstreet #cryptocurrency #forextrader #trading #binary #luxurylifestyle #entrepreneur #stockmarket #realestate #billionaire #investor #food #investing #success #iqoption #forexsignals #binaryoptionsignals #usa #invest #workfromhome #forexlifestyle #trader

Exit mobile version