The Washington Service reports insider buying ratio at the highest level they’v recorded since the Great Recession in the fall of 2008 and the retest in 2009.. They look at a 30 day moving average ratio of insider buys to sells.  All previous markets have sharply rebounded when this occurred. Is this time different?

We track insider purchases over $200K very carefully and accurately. Last Friday there were only six buys over $200k and 145 sells.  It seems even insider buying is now rolling over.  That is likely because as we near the end of the quarter, most insiders are prohibited from buying their company stock due to the appearance of having special insight into how the quarter shapes out.  Nonetheless that didn’t stop the trend from reversing. It could be that insiders are rethinking their enthusiasm or turning into forced sellers. Large purchase insiders now look like sellers, not buyers. The insiders that did buys amassed some enormous short term returns.

Friday March 27th

NADA Nothing

Thursday March 26th

CASI CASI Pharmaceutical Chairman He buys$1.1M at $2.03.  CASI is an early stage cancer biotech

GMS GMS Director Ross buys 81,200 at $15.97 spending $1.1M GMS Distribution manufactures and sells portable power distribution boxes and electrical cords for contractor use (residential, apartment and hotel).

NKE Nike Director ups his holdings by 26% with a purchase of 2500 shares at $84.22

ORCL Oracle  One director bought $1M worth at $48.59, another exercised options selling $4.4M worth.

Wednesday March 25th

ATNX Athenex Inc  Director Folk bought 50,000 at $7.25. Athenex, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of various therapies for the treatment of cancer and related conditions in North America and Asia.

Tuesday March 24th

DCO Ducommun Inc Chairman Oswald bought 22,500 shares at $23.24. DCO is evenly split between defense and commercial aerospace.

UHAL  Amerco Chairman Shoen buys 3000 at $273.41

PSEC Prospect Capital Co Chairman bought $1.6M at $4.63 upping his holdings by 1/2%. Another bought 100,000 at $4.45

WSM Williams- Sonoma Inc Director bought $400.1K of this retailer. WSM is definitely a survivor with $400M in cash and only $299M in long term debt.

CAR Avis Budget Group director bought 16,000 at $15.96

White Mountain Ins Director Davis bought 1050 at $757.61. It closed at $905.86

Monday March 23rd

AFL AFLAC Incorporated  President Crawford bought 25,000 shares at $26.29

CACC Credit Acceptance Cor CFO bought 1000 at $215

CATS Catasys President bought 21,835 at $9.16. The stock closed at $14.20 on Friday. We looked at this rapidly growing healthcare software provider but with just $13.6M in the bank and not yet profitable, we passed.

GPC Genuine Parts Director bought 5000 at $55.23

GHC Graham Holdings Company VP bought $500K at $288.49. Graham Holdings Company (NYSE:GHC) is a diversified education and media company whose operations include educational services; television broadcasting; online, print and local TV news; home health and hospice care; and manufacturing.

EQC Equity Commonwealth Director bought $2.9M at $28.84. EQC is an internally managed and self-advised real estate investment trust (REIT) with commercial office properties. Legendary Sam Zell is the Chairman and is sitting on $2.8B in cash with no doubt. This was a good buy, stock is not far from its all time high. They just sold a building in Washington State and upped their cash to $3.4B. Expect there to be some great bargains available to buy.

HPP Hudson Pacific Property director bought 75,000 at $16.67. HPP  is a real estate investment trust that owns 14.9 million square feet of primarily office buildings on the West Coast of the United States .

NHI National Health Inv  Chairman bought $1M worth at $36.16.  A director bought $199.5K a week earlier at $43.17. NHI is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI closed out the week at $54.41, and outstanding short term buy.  The CEO sold 8,000 shares a month earlier at $90.60.

PSEC Prospect Capital Chairman Barry bought $11.4M at $4.97

ADS Alliance Data Systems bought 10,000 at $29.06 on 3/20/20

CMD Cantel Medical Corp CEO bought 10,000 at $21.55

CNTY Century Casinos CEO Hoetzinger bought 250,000 shares at $1.35. It closed Friday at $2.50

HDS HD Supply Holdings Director bought 314,118 at $27.44. It closed the week out at $27.23.

SLRC Solar Capital insiders bought $1.2 million or so at $10.59- $9.32.

VST Vistra Energy Corp CFO bought $266.8K at $13.34. Vistra closed out the week at $16. Vistra Energy is a premier Texas-based energy company focused on the competitive energy and power generation markets.

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