POTUS tweeted he tested positive for Covid-19.  Tellingly it was the most liked Trump tweet ever.  The President’s demand for loyalty is now looking like it could extend to death as Trump conducts super spreader events and legions of followers succumb to the virus. The market had its worst September in 9 years.  Insider buying was anemic.   In spite of the headlines, the market was up 1.52% for the week.  Our notable insider buys were up 5.12%

 

Furniture maker STEELCASE INC had a huge week, up 14.44%.  VP Schmitt bought 30,000 shares at 10.14, kicking off the rally in SCS.  Steelcase is best known for its office and commercial furniture.  With the work from home/anywhere transition in the very early stages, one may be skeptical of the future for office furniture.  Certainly the office REITs are broadcasting tough times.  Perhaps VP Schmitt’s purchase is a bet on reimagining the office environment post Covid.  Certainly there will need to be more social distancing and rearrangement of cubicles and meeting spaces to reflect this new reality.  There is no question the home office is on a buying spree but whether that extends to commercial space is not clear to me. I’d bet it doesn’t but we did home on the bandwagon with SCS but we will be quick to get off.

 

At Home Group Inc. Director Crevoiserat (love to say that name) bought 13,526 shares of this big box retail chain specializing in home decor products based in Plano, Texas. The specialty retailer’s stores each carry over 50,000 unique items across broad product categories including furniture, garden, home textiles, housewares, patio, rugs, seasonal decor, tabletop decor, and wall decor.  HOME has been on a tear, outperforming the S&P 500 by over 670% surging the last 26wks.  Its no surprise that insiders would be buying on any pullback.  Crevoiserat is already up 12% in less than a week.

Director Bairrington bought 15,000 shares at $21.70 of pipeline giant PHILLIPS 66 PARTNERS LP   This has been tough sledding for PSXP shareholders,  PSXP is down from the $60 range pre pandemic at the first of the year. Headquartered in Houston, Texas, Phillips 66 Partners is a growth-oriented, traditional master limited partnership formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and natural gas liquids (“NGL”) pipelines and terminals and other transportation and midstream assets.  PSXP has scheduled its 3rd quarter 2020 earnings call for October 30.  Insiders have been big buyers of PSXP at prices more than twice what its trading at.  

Phillips 66 Partners has raised its dividend every year since its inception, 2013.  The current yield is close to 15.34%. Clearly investors don’t think the future of crude oil pipelines is great. California has banned the combustion engine after 2035. In previous posts we have mentioned we are looking for a major contrarian play if the Democrats retake the White House and Congress and institute their “green” initiatives.  The desire to replace hydrocarbons with renewables is greater than the appetite of consumers to pay higher utility bills.  My guess is that the price of crude will rise under a Democratic sweep and with it the stock prices of related companies.  We are building a list and PSXP is on it.

PBF Energy has seen consistent insider buying. The latest buying into this small refiner was VP O Connor’s purchase of 25,000 shares at $5.86 and CEO Nimbley’s purchase of 50,000 at $5.92.  This is another name that could pop big if the price of oil gains some legs.  Even though refiners work more on the crack spread than the underlying crude price, the sentiment is what needs to change before any names can work.

Continental Resources iconic Trump supporter and vocal fracking pioneer, Harold Hamm, continues to throw good money after bad, purchasing another 769,235 shares at $12.68.  Where does Harold Hamm get all this money when he never sells stock?  This is reminiscent of Aubrey McClellan in the ill fated buys of Chesapeake Energy, now bankrupt.  Aubrey is dead, presumably a suicide by running his car into a bridge underpass at high speed.  It turns out Goldman Sachs was loaning him the money without revealing he was hypothecating his stock. Sarbanes Oxley supposedly put an end to this kind of sleazy stock manipulation. I have heard Harold speak a couple of times and I hope CLR is not a repeat of this chicanery.  We wouldn’t touch the stock until we get answers to “Where does Harold get the money to buy CLR?

GOLUB CAPITAL BDC Inc. CEO and Chairman continue to buy this mezzanine lender partner to private equity.  GBDC has a nice dividend yield over 8% but don’t expect much else as investors don’t really believe in the underlying value of their marks. We have written on this in previous posts.    GBDC is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company. The Company makes investments primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans) and other senior secured loans of middle-market companies that are, in most cases, sponsored by private equity firms. GC Advisors structures its one stop loans as senior secured loans, and obtains security interests in the assets of the portfolio company that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of the portfolio company.