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 February 2018.
  • It was its worst week since October 2008, as it fell 12.4%.

That’s just the headlines.  Some stocks fared far worse, like oil and gas-Exxon down 18%, anything travel related like airlines and cruise ships, community gatherings like Disney with its theme parks and Cine-mark movie theaters, and the list goes on.  Every market sell-off of consequence only ends with waves of insiders buying their own stock on the open market.  So what were they doing this week? I decided to mix up the format this week and look at it day by day.  The carnage was so fast and the news so rapidly changing, that I assume most corporate management were transfixed by the headlines, busy with potential crisis management and not staring at their stock prices plummeting on computer screens. But then again, I suspect that every director, C-level officer, and 10%+ shareholder always have eyes out of the back of their head watching their stock price.

All major market corrections end with insiders buying massive amounts of their own companies stock on the open market.

Monday, Feb. 24 The Dow tumbled more than 1,000 points on Monday and marked its third-worst point drop in history 

CEO Heckman buys $2.0 million of Bunge LTD (BG) at $53.76.  This was not a planned purchase but Heckman is part of a new team that activist investors brought in to fix the giant agribusiness play. There has been steady insider buying, including the Head of Global Risk picking up $500 k as well on 2/26.  We are doing a brief write up on this buy rated stock in the next few days.  BG is also a China play, with trade war toned down and Chinese commitment to buy unprecedented amounts of American farm products.  China might be down but people still got to eat and after last years decimation of the hog population due to the swine flu, lots of soybeans are needed to replenish the pigs.  No one is talking about swine flu anymore. We’ve moved on to humans.

CFO of LYFT, Robert Kieth, bought $1.0 million of this ride sharing play at $45.25.  This was filed on Monday but actually bought on Friday, the week before. Insiders have 48 hours to get their Form 4s in.  He hadn’t yet got the memo that people might be hesitant sharing economy cars due to fears of contagion. But then again what choice do we have?

Medtronic (MDT) Chairman Ishrak bought $1.0 million of this med giant at $113.68. This was related to a stock dip after reporting earnings.  People will spend more on healthcare regardless of the virus. Medtronic has a good line up for the second half. We are a buyer of this name.

Morgan Stanley (MS) Director Stephen Luczo bought $2.6 million after the stock sold off as Wall Street thinks they overpaid for E-Trade.  What does former CEO and current Chairman of the Board of disk drive titan Seagate Technology know about the investment business?  I don’t know but he has a good record trading Seagate stock.

President Baldridge bought $1.5 million of ViaSat Inc. (VSAT) at $55.54 as the stock sank to historic lows.  It hung tough all week closing at $57.50.  People will watch more TV and stay at home due to virus concerns.

American Airlines director John Cahill stepped up and bought 25,000 shares at $25.14 for a cool $628.4k. By the end of the week, AAL closed at $19.36.  Ouch!  We feel the pain as we lightened up on the stock before the open on Monday, the day Cahill was buying.  We did buy a small amount back on Friday’s close.  Airlines have not been a rewarding experience for shareholders including Warren Buffett, who owns 10% of all of the majors. American Airlines is now trading lower than its recapitalization IPO in 2013 in spite of favorable global travel trends. I have to believe this is one of the real bargains in the market and that air travel growth will resume once the virus headlines peak.

Delta Airlines Director David Taylor nibbles at Delta stock, buying 2000 shares Monday at $53.67 and follows up on Tuesday with another 2000 at $51.31. DAL closed at $46.13 on Friday.

Dir Dexhiemer bought $499 K of Plantronics. This could be interesting at this price of $14.27. PLT has a video conferencing business as well as their line of headsets. The stock has been a dismal performer and Dexhiemer’s past buys haven’t been well-timed either.  He purchased $1.2 million at $46.21 this time last year and another 20,000 at $25.44 on 11/8/19. Could this time be different?

Magnolia Oil & Gas  (MGY) Chairman Stephen Chazen  bought 201,000 shares at $7.76 spending $1.6 million. One of the few stocks that ended the week higher than what it was purchased it.

Private prison operator GEO group’s CEO Foley buys $8.5 million at $16.58,   GEO yields over 13%.  Perhaps he is thinking no one is talking about ending private prison’s right now with the virus.  Perhaps he is thinking they have facilities for massive public quarantines if needed. Foley doesn’t have a particularly good history n it comes to insider purchasing. He purchased $3.8 million  back in May of 2014 at $33.63 per share. 

Tue Feb 25  Dow drops 879 points with selling right into the close.  Now we are in the beginning of the deer in the headlights phase.  

CEO Doheny bought 7500 shares of Sealed Air Corp (SEE) at $33.45.  It’s been a big under-performer. A director also bought $525 K at $35 on 2/14/20.  The company in its latest presentation boasts its ESG creed, Design and advance packaging solutions to be 100% recyclable or reusable; expect to deliver ~ 50% recyclable or reusable solutions by end of 2023.

Greg Armstrong, CEO of Plains GP Holdings (PAGP), bought $1.1 million of this energy infrastructure and logistics companies aka pipelines.  PAGP yields 10.46%.  Again this purchases was on Friday before the historic market rout.  That didn’t deter other insiders as the Chairman Chian and Pres Pefanis bought steadily throughout the following week at slightly lower prices.

Wed Feb 26 the Dow fell 123.77 points, or 0.46%, to 26,957.59. The S&P 500 dipped 0.38% to close at 3,116.39. The Nasdaq Composite ended the day up 0.17% at 8,980.77. The major averages struggled to find direction as investors kept adding bonds to their portfolio amid coronavirus concerns.

Private prison operator GEO group’s CEO Foley buys $8.5 million at $16.58, on 2/26 and 2/24.   GEO yields over 13%.  Perhaps he is thinking no one is talking about ending private prison’s right now with the virus.  Perhaps he is thinking they have facilities for massive public quarantines if needed. In addition to prison facilities operated under contract with U.S. states, the GEO Group owns and operates the Broward Transitional Center in Pompano Beach, Florida, the Aurora Detention Facility and the Northwest Detention Center in Tacoma, Washington, all under contract with U.S. Immigration and Customs Enforcement.  Foley doesn’t have a particularly good history when it comes to insider purchasing. He purchased $3.8 million  back in May of 2014 at $33.63 per share. Keep this one in mind if they start talking about converting detention centers into quarantine centers.

Affiliated Managers (AMG) Director Byrne buys 5000 shares at $85.13 on the 24th and 25th at $85.13. The CEO bought 10,000 shares on 2/18 at $83.13 and director bought 2500 shares at $87.67.  I see no obvious catalyst to these buys.

Inovalon Holdings (INOV) Keith Dunleavy bought $1.3 million of this health bioinformatics company at $20.33.  It closed Friday at $19.48. He has a good track record buying his stock.

Two insiders bought Ryder Systems (R) stock at prices from $39.20-$39.64. Ryder had a huge earnings miss but it was clouded by charges associated with residual value of the fleet.

CEO Mike Spanos bought $502 K worth of park operator Six Flags Entertainment (SIX) at $31.27. Hedge fund operator H Partners bought $44 million. This is a ballsy buy no doubt. Six Flags just cut the dividend, the CFO retired, and new park in China, is not going very well. Of course, what would you think.  Six Flags closed Friday at $25.90.

Cinemark Holdings (CNK) CEO bought $541.9 K at $27.09 and Chairman Mitchell bought $2 million at $26.71.  This might not look  smart if people stay out of movies for a while from fear of contagion. CNK pays a healthy dividend of 5.5% but if people avoid going to the movies, they might not be able to sustain this.

Two insiders at park operator Cedar Fair bought $775 K at$44.36 and $44.81. FUN closed at $45.80 Friday rallying 2.37%. After the disaster at Six Flags, I’m hesitant to own this.

Thur Feb 27- Dow plunges 1,191 points, its biggest one-day point drop, as coronavirus fears escalate

Allegiant Travel Co (ALGT) President bought $1 million at $139.95.  ALGT rallied hard on Friday closing up $4.58 at $135.54. This budge carrier has no international flights and a good balance sheet.

Outgoing CEO Sandbrook bought $419.4 K of US Concrete. He also bought $414.1 K at $39.44 back in December.  Its highly unusual  Director Cellar bought $1.0 million at $40.02 back in November. The stock plummeted on last quarter earnings report that underwhelmed. USCR closed at $26.84 Friday.  It’s a matter of when, not if before the U.S. undergoes a massive infrastructure program.

Friday Feb 28th after the close, Bill Gates Microsoft co-founder Bill Gates and expert from his global health foundation and deep connections with the world’s leading scientists, said the coronavirus is starting to behave like the “once-in-a-century pathogen we’ve been worried about.” Gates also pointed out COVID-19′s current predicted fatality rate is higher than that of the 1957 influenza pandemic, which killed an estimated 66,000 people in the U.S.

(AAT) American Assets CEO and Chairman bought $1.4 million at $42.77. This is a diversified REIT yielding 2.90%.

CFO Lewin bought $1.4 million of KKR on Friday.

Ryman Hospitality Chairman (RHP) and CEO and operator of the Grand Ole Opry  REIT operator bought $556.5 K on Friday.


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