Notable Insider Buying Week 12-20-19

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 9.33%.

Let’s not forget Kinder Morgan either. This midstream giant continues to attract money from its founder Richard Kinder, buying another $1.2 million at $20.14.  This stock goes nowhere and it makes me wonder where does Mr. Kinder get all the money to buy his stock as he has purchased hundreds of millions of dollars worth since 1998 without every selling a single share.  Talk about conviction.

We are ignoring the purchase of Transatlantic Petroleum as this was a private transaction and not an open market purchase. There is no telling what is behind this private deal.

Children’s Place reported disappointing earnings and outlook and the stock plunged.  Two insiders scooped up shares, the largest being the CEO’s $1 million buy at $55.54.  Four insiders buying restored some confidence and the stock leaped back by over 11%. I wouldn’t buy this name now but adept traders could have scored well following insider buys.

Globalstar Chairman Monroe continues to seemingly throw away money with his purchase of $1.3 million at $.41 per share. We have no idea of what is going on here other than Monroe likes to trade this name. GSAT gives you the power of the Globalstar network through satellite Wi-Fi allowing you to access your emails, make phone calls and send text messages with your current smart device where there are no cell signals.

FedEx reported disastrous earnings and said that this marked the trough of its earnings shortfalls.  FDX has been on a two-year descent, struggling with its relationship with mega shipper Amazon and its integration of TNT.  Director Johnson might believe this is the bottom as he bought $1.48 million at $148.22.  It looks like dead money at best at this price until FDX shows us that it can right the ship.

Chairman and CEO bought $1.27 million of Neoleukin Therapeutics at $8.40 on a spot secondary.  Biotech is on fire and he has already made over 20% on this secondary purchase.

Two REITs attracted insiders, Ryman Hospitality Place and Agree Realty.  RHP yields 4.12% and ADC with 3.43% at Friday’s closing price.

US Concrete Chairman and CEO Sandbrook bought $414,120 of his company’s stock at $39.44.  Everyone knows the infrastructure around the U.S. is crumbling.  This could be a politicized play in an election year.  Tow other insiders bought USCR stock as well as insiders have been buying Granite Construction, GVA.

For the complete list click here Insiders Buying Week 12-20-19

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 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.

Prosperous Trading,

Harvey Sax