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We are witnessing the mother of all speculative bull markets. The average notable insider buy we track was up an average of 12.48% versus the healthy gain of !.83% for the S&P 500. When this will end, no one knows but it’s time to make hay while the sun shines.  Just hope you don’t lose it all and more when the party ends.

Party City Holdco Inc. up 30.53%

AILERON THERAPEUTICS INC up 22.73%

At Home Group Inc. up 22.32%

Clearside Biomedical Inc. up 21.73%

WORLD ACCEPTANCE CORP up 18.80%

BERKSHIRE HATHAWAY INC up 5.26%

Cheniere Energy Partners L.P. up 4.49%

PERRIGO Co plc up 2.67%

Howard Hughes Corp up 2.20%

EYEGATE PHARMACEUTICALS INC up 0.48%

UNITED INSURANCE HOLDINGS CORP. down 0.77%

Hedge fund operator Clifford Sosin continues to bet large dollars on speculative names, like Party City. He purchased 406,500 shares at $6.11 and 316,500 of PRTY at $6.63. Sossin has been buying this name all year starting in March at $.47 per share.  We normally don’t pay much attention to hedge fund buys and 10% owners but Sossin has a hot hand at the moment.

Party City is the leading party goods and Halloween specialty retailer by revenue in North America and, we believe, the world’s largest vertically integrated supplier of decorated party goods with multiple levers to drive future growth across channels, products, and geographies.  Party City operates 830 company-owned and franchise stores throughout North America.

 

Aileron Therapeutics is a clinical-stage company developing a novel medicine, ALRN-6924, to improve the outcomes and the quality of life of cancer patients.  Munner Satter of Satter Management purchased 9 million shares at $1.1 in a direct offering. Satter owns large stakes in a few development biotechs. Even though Aileron has soared 22% since the purchase, ALRN has room to soar if their drug proves efficacious. There are no obvious catalysts on the horizon according to our sources so I’d be careful chasing this name.  The money the Company raised should provide some runway as Aileron Therapeutics, Inc. (NASDAQ:ALRN), announced that it has entered into definitive agreements with fundamental healthcare investors for the purchase and sale of 32,630,983 of its shares of common stock at a purchase price of $1.10 per share in a registered direct offering priced at-the-market under Nasdaq rules.

 

At Home Group shares +7% after it reported Q4 comps above expectations earlier (19.24 +1.26) At Home, the home decor superstore, specializes in home decor products and is based in Plano, Texas. The specialty retailer carries over 50,000 on-trend home products to fit any budget or style, from furniture, mirrors, rugs, art and housewares to tabletop, patio and seasonal decor.  Hedge fund manager Sossin was busy last week buying 200,00 shares of HOME at $15.68, 275,007 shares at $17.55, and 169,993 at $16.37.   After a first-quarter Covid-19 plunge in sales, the company’s revenue growth has been rising sharply since then. Its shares soared 7% after it reported Q4 comps above expectations. (19.24+1.26)  The next earnings release is March and the consensus is $502.19 The company looks like a 20%+ revenue grower for some time.  Although there is a lot of competition in the category, At Home looks like a solid play as an omnichannel retailer. We would be a buyer on dips.

Clearside Biomedical, is a biopharmaceutical company dedicated to developing and delivering treatments that restore and preserve vision for people with serious back of the eye diseases. According to the Company, their proprietary SCS Microinjector® targeting the suprachoroidal space (SCS®) offers unique access to the macula, retina and choroid where sight-threatening disease often occurs. Their injection platform is an inherently flexible, in-office, non-surgical procedure intended to provide targeted delivery to the site of disease.

They are leveraging our SCS injection platform by building an internal research and development pipeline and by creating external collaborations with other companies, notably Bausch and Lomb with XIPERE, a proprietary suspension of the corticosteroid triamcinolone acetonide formulated for administration to the back of the eye for the treatment of macular edema associated with uveitis. Corticosteroids are the standard of care in uveitis and are effective at treating the inflammatory aspect of ocular disease although we have no idea of how big a market opportunity this approach represents.  One thing for sure is that the stock has nearly doubled in the last week.

Hedge fund operator Whitmore bought 350,750 shares of CLSD at $2.85 on a recent direct offering. Whitmore has been buying shares all year and this latest batch is the largest purchase and the highest share price. If you’re a student of behavior, it doesn’t get any more bullish. Early-stage biotechs are nearly impossible to evaluate for most investors on a scientific level. There is no sector where we rely on insider buying more heavily than informed insiders.  It’s also a sector for these very reasons ripe with fraudsters and opportunists.

So what do we know about Bradford Whitemore?  For starters, he’s not a scientist- so he may not have an inside track on the science.  There is something he likes, though as he is a 10% or greater shareholder owning 3.529 million shares.  Bradford T. Whitmore occupies the position of Chairman at Ultralife Corp. He is also on the board of Bell Geospace, Inc.
In his past career, Mr. Whitmore was Managing Partner at Grace Brothers Management LLC. Mr. Whitmore received an undergraduate degree from Purdue University and an MBA from Kellogg School of Management.

 

World Acceptance Corporation operates a small-loan consumer finance business. The Company offers short-term loans, related credit insurance, and ancillary products and services to individuals. World Acceptance generally serves individuals with limited access to other sources of consumer credit from banks, savings and loans, other consumer finance businesses, and credit cards.  WRLD hasn’t had any revenue growth in years so we don’t see what changes that.
Clifford Sosin is at it again, this time buying 406,500 at $6.11 and 37,900 shares of WRLD at $111.43.

Berkshire Hathaway is a holding company for a multitude of businesses, including GEICO and Fruit of the Loom. It’s run by chairman and CEO Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Neb., and was originally a company comprised of a group of textile milling plants. There is nothing to add but generally, we have never seen a director buy BERKY and lose money. Whether that’s a coincidence, luck, or correlation, I don’t know, but either way director Ronald Olson’s purchase of 4000 BRK.B shares at $222.33 looks like money in the bank.

Insiders have been buying Perigo CO. The latest buys were VP Sorota buy of 7,513 of PRGO at $43.38.  Perigo stock has languished. You might not realize but I’d lay odds you are one of their customers.  Perrigo’s branded and private label self-care products are available at retailers, pharmacies, and e-commerce outlets in the United States, across Europe, and in other major markets.

Nov. 4, 2020, Perrigo Co. PLC reported financial results for the third quarter of fiscal 2020. Consolidated net sales for the last quarter totaled $1.2 billion, representing a 1.3% increase compared to the same quarter prior year. Adjusted diluted earnings per share for the quarter was $0.93, representing a 10.6% decreased compared to adjusted diluted earnings per share of $1.04 from the same quarter prior year. This is wy the stock has done nothing but insiders are seeing something different.

 

 

 

Howard Hughes owns, manages and develops commercial, residential, and mixed-use real estate throughout the U.S. Our award-winning assets include the country’s preeminent portfolio of master planned communities, as well as operating properties and development opportunities including the Seaport District in New York; Columbia, Maryland; The Woodlands, The Woodlands Hills, and Bridgeland in the Greater Houston, Texas area; Summerlin, Las Vegas; and Ward Village in Honolulu, Hawai’i. Our portfolio is strategically positioned to meet and accelerate development based on market demand, resulting in one of the strongest real estate platforms in the country to drive sustainable, long-term growth, and value for our shareholders.
If you haven’t heard about Bill Ackman’s monster trade on Covid 19 where he made his investors a couple of Billion, that’s right Billion dollars, you’ve not been listening.  Now he’s adding to his monstrous holdings of Howard Hughes again. This time adding 2,516,846 shares of HHC at $79.12.   When you’re hot, you’re hot and there is no one trading big money that is hotter than Ackman right now.
EyeGate Pharma (NASDAQ: EYEG) is a late-stage clinical company focused on developing for treating disorders of the eye. EyeGate’s lead product, Ocular Bandage Gel (“OBG”), is based on a modified form of the natural polymer hyaluronic acid.  Hedge fund Armistice Capital bought 1,531,101 shares at $5.23. Armistice Capital is a global, long/short, value-oriented and event-driven hedge fund focused primarily on the health care and consumer sectors.  They invest predominantly in equities and can be opportunistic across the capital structure.  They have some smart people working there so I’d pay attention to this name.  You should also factor in that Armistice got 1.531 million  5 year warrants at $5.25. What the warrants are worth is up to someone else’s guess but in any case, it does make the effective purchase prices materially less than $5.23 if you are considering tagging along with Armistice.   HC Wainwright has a buy on the stock with a target of $10.

 

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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