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Odonate Therapeutics Inc. up 13.79%

Vistra Corp. up 7.28%

HENRY JACK & ASSOCIATES INC up 0.86%

 

 

It hasn’t been a good year for Odonate Therapeutics but that could be about to change. Kevin Tang was at it again, this time the CEO buying $4.18 Million of ODT at $15.15.  Incredibly enough in this charged market the stock almost immediately pushed $20 per share where we took most of the profits off the table.  Sorry but when stocks move 25% in one day on news like this and you don’t ring the register, well, you’re just too greedy.

We kept a smallish position to try and analyze what he might see in the biotech he leads.  On December 11th, ODT said in an oral presentation in San Antonio at the breast cancer symposium that Contessa met its Phase 3 primary endpoint in a study of tesetaxel in patients with metastatic breast cancer.  “The promising clinical results to date, combined with tesetaxel’s unique, once-every-three-weeks oral dosing regimen, make this investigational agent an exciting potential new treatment option for patients.”

It’s incredibly difficult for the average investor to analyze developmental biotechs.  Insider buying and selling is very helpful in this regard. , Kevin C. Tang is a businessperson who has been the head of 6 different companies and presently occupies the position of Chairman & Chief Executive Officer for Odonate Therapeutics, Inc., Chairman at La Jolla Pharmaceutical Co.   There has been $185 million of insider purchases at Odonate Therapeutics, with no sales. I think we will stick around with the balance of our shares for now and see how it develops.

We’ve been holding Vistra Corp since this summer, moving from small profits to small losses. Vistra is the largest competitive residential electricity provider in the country and offers over 50 renewable energy plans. The company is also the largest competitive power generator in the U.S. with a capacity of approximately 39,000 megawatts powered by a diverse portfolio, including natural gas, nuclear, solar, and battery energy storage facilities. In addition, the company is a large purchaser of wind power. The company is currently constructing a 400-MW/1,600-MWh battery energy storage system in Moss Landing, California, which will be the largest of its kind in the world when it comes online.
So you would think this would be hot with all the chatter about Biden and renewables?  The CFO, Burk,e has been buying shares. He was recently appointed it’s president and CFO.  Burke, who has been with Vistra and its predecessor companies since 2004, has been serving as executive vice president and COO since 2016.   He recently bought 18,000 shares at $18.25 on December 16th only to see Bank of Amercia’ downgraded the stock the following day to regulatory concerns for the renewable pressure in Texas.  Director Ferrailoi bought 20,000 shares of VST at $17.81 that day on the drop in price.  The analyst mentioned he didn’t see a substantial downside and that’s confirmed by the Director laying out $356,180.  We’d be buyers here. It’s hard to find stocks that haven’t made a big move and Vistra is one of them. I like the 2.8% dividend as well.
The big buy for us last week was Director Wimsett’s purchase of 8,900 shares at $156.35 of the underperforming banking software company, Henry Jack and Associates. Wimsett purchase was the first we’ve seen and he has been has been a member of the JKHY board since 2012.  This will move higher with the relative outperformance of the banks, now.  Credit Suisse analyst Nik Cremo initiated coverage with a neutral JKHY on December 7th with a $175 price target.  He said the stock was fully valued and therefore justified his neutral rating.
JKHY guided down in August but based on this large buy, I am betting those August views are more bullish now.

 

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Insiders sell stock for many reasons, but they generally buy for just one – to make money. You’ve always heard the best information is inside information.  Everyone who has any experience at all in the stock market pays close attention to what insiders are doing.  After all, who knows a business better than the people running it?  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 SECForm4  as they provide a way to manage and make sense of the vast realms of data. I’ve tried a lot of vendors and SECForm4 is one of the most customer-friendly and responsive I’ve used.

Another source for insider buying and selling and much more is FinViz Elite. FinViz stands for financial visualization and they do an amazing job of providing reams of data and the tools to help you get to the bottom of it, the information that helps me make informed decisions and probable outcomes. I’ve been using their site for years and it only gets better over time.

This is as close to “insider information” that an ordinary investor is likely to see- and it’s entirely legal. 

BEWARE– Following insiders can be hazardous to your financial health unless you know what you are doing.  Unlike the raw, unfiltered data, The Insiders Fund blog informs you of the purchases that count, the ones that are just window dressing into deceiving the public that all is hunky-dory, and those that are just flat out other people’s money and should be just discarded like bad fish. 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 and options. 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. Also planned sales that just pop up out of nowhere are basically sales and are seeking cover under the Sarbanes Oxley corporate welfare clause. 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. Don’t let anyone fool you into believing they never make mistakes.  No one tracks and understands insider behavior better than us. We’ve been doing it religiously since 2001 when I quit being an insider myself and devoted myself full time to managing my personal investments. 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.  THE INSIDERS FUND invests in companies at or near prices that management has been willing to invest significant amounts of their own money in.  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

The Insiders Fund was the 4th best long-short equity fund in the world in 2019