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GAIA INC up 31.42%

Blue Apron Holdings Inc. up 18.96%

ADT Inc. up 16.72%

NetApp Inc. up 9.34%

IRONWOOD PHARMACEUTICALS INC up 9.06%

Morphic Holding Inc. up 8.80%

TENNECO INC up 8.63%

Texas Pacific Land Corp up 4.59%

PARKER HANNIFIN CORP up 4.25%

NEWS CORP up 3.49%

Walmart Inc. up 3.46%

Forian Inc. up 3.31%

Kennedy-Wilson Holdings Inc. up 2.98%

LIONS GATE ENTERTAINMENT CORP up 2.37%

CERNER Corp up 0.18%

Kinsale Capital Group Inc. up 0.17%

PLx Pharma Inc. up -0.25%

Archer-Daniels-Midland Co -0.26%

MICROSOFT CORP -0.44%

INTERCEPT PHARMACEUTICALS Inc -0.76%

InnovAge Holding Corp. -2.40%

 

Director Maisel purchased 25,000 shares of GAIA, INC at $10.98.  GAIA is an international alternative media video streaming service and online community focusing on fringe-science and yoga. Its brands include Gaiam TV which changed its name to Gaia in 2016. The site contains video and written articles on yoga, psychedelics and pseudoscience. Some of the reviews from their website Inspirational! Life-Changing 100x more amazing than Netflix.

The stock certainly was more amazing than Netflix last week gaining 31.42%. Gaia reported a good quarter and improving fundamentals on March 1st but it was the buy reported on 3-8-21 that moved the stock.  If you were thinking about how does insider buying impacts price movement, you don’t need to look any further. I wouldn’t tough it here, though.

CEO Linda Kozlowski and Director Huebner bought 10,700 shares of Blue Apron Holdings, Inc at $7.04 and 14,090 at $7.17.   Blue Apron Inc. is an American ingredient-and-recipe meal kit service which exclusively operates in the United States. The weekly boxes contain ingredients and also include suggested recipes that must be cooked by hand by the customer using the pre-ordered ingredients. Wikipedia

Blue Apron has been a laggard compared to its closest and much larger competitor Hello Fresh.  The offerings are remarkably similar. There is a consensus that Blue Apron’s meals are tastier and more creative than Hello Fresh but as a consumer of both, I can attest they are both great. I love the service.  The recipes are delicious and the way they package it with just the right amount of ingredients and “paint by the number” cooking instructions make for an entertaining way for busy professionals to experience the enjoyment of home cooking without all the fuss. The meals generally take 15-25 minutes of prep time and 20-40 minutes of cooking. If you like to cook, try it.  It’s great.  The Insiders Fund is an owner of Blue Apron but admittedly we are disappointed by these modest insider purchases considering the thumping APRN took on its most recent earnings report.  We believe APRN has the potential for a massive short squeeze if they can get their costs in order and start to show profitable growth like Hello Apron.  This is a big if, though.  My estimate is that about 15% of the float is in the hands of short sellers.

 

VP Anderson purchased 8100 shares of NetApp Inc at $61.79. NTAP is an American hybrid cloud data services and data management company headquartered in Sunnyvale, California. It has ranked in the Fortune 500 since 2012. Wikipedia As you can see in the chart above NetApps stock has gone nowhere over the last several years.  NetApp has been transitioning from a networking hardware company to a hybrid cloud company.  The reality is that many companies will not move all of their operations to the cloud-like AWS or Microsoft Azure but instead have some kind of combination of the two.  That’s what NetApp is banking on.  They haven’t had annual revenue growth since 2018 but this is the year, they will likely turn the corner on that.  In 2019 they were named Google’s Partner of the Year for Infrastructure.   They work with Microsoft Azure, Google Cloud, was and a company’s private cloud.  We’d be buyers on any pullback and we would sell the 60 puts hoping to get the stock a price at $60 or below.   CFO Berry bought 15,000 shares at $63.89 on December 17th, 2020.   Keep in mind though, that the CEO exercised 160,800 shares of stock options at $36.59  last week and sold them all on the open market. We are disappointed in that. It would have been much more bullish to have sold enough to pay the tax burden and kept the rest.

All tech stocks are in a distribution pattern right now.  Perhaps this modest pullback is behind Microsoft Director Walmsly buying 4300 shares at $236.80.  Walmsley has been on the board for over a year and this is her first buy of MSFT.  Walmsley is the CEO of GlaxoSmithKline.  I would be careful investing in Mr. Softie here as tech stocks are not acting well and Microsoft’s exchange has been implicated in a massive cyber attack.  We love MSFT and would be aggressive at selling the $215 and $210 put which is right over the 200 day moving average of $214.55

CEO DeVries purchased 143,000 shares of ADT Inc, at $7.13. ADT Inc., formerly The ADT Corporation, is an American company that provides residential, small and large business electronic security, fire protection, and other related alarm monitoring services throughout the United States. The corporate head office is located in Boca Raton, Florida. Wikipedia 

ADT is in an intensely competitive industry and is heavily indebted.  The intersection between home automation and security has been merging.  Google just threw its security business customers under the bus by investing $450 million in ADT and giving them the business they started.  It will take a lot for ADT to overcome its 312% Debt to Equity ratio. We are not buyers.

 

Sarissa Capital Alexander Denner was back at it again buying $2.33 million of Ironwood Pharmaceuticals. We blogged about this last week. Sarissa Capital is a hedge fund with medical doctors and Ph.D.’s as analysts. They know what they are doing when it comes to biotech. This is one of the hedgies we watch closely. IRWD has been a laggard and we would be buyers here of IRWD on the Alexander Denner imprimatur.  According to their website, their in-market product, LINZESS® (linaclotide), discovered in-house, is the branded prescription market leader in its class. Ironwood has one product for GI disease and is partnered with Abbvie.  Biotech’s with an actual product like Ironwood will have to produce or else.  Q4 revenue was $116.68 million and down for the prior year of $126.30. Our guess is that the company is for sale. On February 9th Fly on the Wall reported that with the CEO left and with Sarissa Capital picking up a board seat in November, that this period before they hire a new CEO would be a ripe time for a sale of the company.  Perhaps that’s the reason behind Sarissa Capital buying millions of dollars worth of stock in the last week. The August 10 calls at $2.60 ask are in the money. We are generally a seller of options, not a buyer, but this is one we are tempted to play.

 

We are always on the alert for unusual insider activity.  Companies do secondaries all the time.  Morphic Holdings did one at $70 per share and it’s not unusual to see management participating in it. After all, their future employability and the Company’s viability often depend upon it.  MORF published positive Phase 1 results and the stock surged. Management took advantage of the stock rise and did a $70 share secondary. It’s not unusual for a stock to trade below the secondary too but what is unusual is to see the CFO buying it below the secondary price. That’s exactly what happened when CFO Schegerin bought 3000 shares at $63.50.  MORF is an early-stage biotech developing highly differentiated molecules for the treatment of autoimmune diseases, fibrotic diseases, and cancer.

Director Metcalf bought 17,100 shares of Tenneco Inc at $11.70. TEN is an American automotive components original equipment manufacturer and an aftermarket ride control and emissions products manufacturer. It is a Fortune 500 company that has been publicly traded on the New York Stock Exchange since November 5, 1999 under the symbol TEN. Tenneco is one of the world’s leading designers, manufacturers and marketers of automotive products for original equipment and aftermarket customers, with 2020 revenues of $15.4 billion and approximately 73,000 team members working at more than 270 sites worldwide. Wikipedia

Cyclical plays like Tenneco are what’s working now.  Based on this longer-term chart we would-be buyers on any dip but upon closer examination, their major holder, Carl Icahn is selling. We know better than to bet against Icahn so don’t buy this name in spite of what an insider might be doing.

Newly appointed Director Lance Fritz purchased 3900 shares of Parker-Hannifin at $299.82.  Although this is a big dollar purchase of PH, $1,269,315, it’s also the first purchase by a newly appointed director. We generally discount this kind of buy.  After all, what does a director have to lose when they spending $200,000? They probably get paid that yearly.  Meanwhile, other directors are selling so we are letting this one go by the wayside.

Here’s a head-scratcher. Rupert Murdoch bought $12 million worth of News Corp at $24.09. NWS is the parent company of Fox News, Wall Street Journal, and numerous other media properties. We have no idea of the motivation here. It could be because Rupert thinks it’s a good buy, he’s senile, or some version of estate planning we’re not privy to. For the time being, we’d pass on this until motivation becomes clearer.

Walmart has been selling off and that’s probably the motivation behind Director Stephenson’s purchase of 7,725 shares at $129.63.  We like the chart on this one and we were already thinking of pulling the trigger. That buy by Stephenson helped us make up our mind and now we own it and are sitting on a nice short-term gain.  You can’t chase WMT and expect to make money so sell puts or pick the prices you pay carefully.  Clearly, Walmart is a good long-term buy but it can spend a long time consolidating its gains. It’s back to its August levels after a tremendous multi-year run.  I’m not convinced it’s finished consolidating either so I would put this one in the short-term trade bucket.

Director Stanley Trotman bought 20,543 shares of Forian Inc at $12.07 per share. This is the first and only open market buy of FORA.  If you’ve never heard of Forian, you’re not alone. Forian is the result of the combination of Helix Technologies, Inc. (OTCQB:HLIX) and Medical Outcomes Research Analytics, LLC.  According to their press release, “The combination empowers Forian to provide a unique suite of SaaS solutions, data management capabilities and proprietary data and analytics to optimize and measure operational, clinical and financial performance for customers within the traditional and emerging life sciences, healthcare payor and provider segments as well as cannabis manufacturers, dispensaries, cultivators and regulators. Forian expects to begin trading on The Nasdaq Stock Market LLC under the symbol “FORA” on March 3, 2021. Shares of Helix will no longer trade on the OTCQB beginning on March 3, 2021 insofar as each share of Helix was exchanged for 0.05 shares of Forian common stock in the merger. There are approximately 32 million shares of Forian common stock outstanding on a fully diluted basis.”

We could not find any financials on this company. It’s the kind of stock that could really take off in this hyper speculative market but it is thinly traded.  We are not doing anything here but it’s on our radar now and probably should NOT be on yours.

Director Zax bought 50,000 shares of Kennedy Wilson Holdings at $20.14.  This is an unusual buy because KW is near a 52 week high and a director is buying $1 Million dollars worth.  KW is global multifamily and commercial REIT yielding 4.25%.  REITs and utilities have been selling off because of the recent rise in interest rates. We have an order in to buy at $19.81. I would certainly not chase this name.

Gordy Crawford is at it again this time buying 100,000 shares of Lions Gate Entertainment. His last buy was 200,000 at $8.309.  I honestly don’t know what to make of it as he has been buying regularly since 2016 at least. LGF.B is an American film production and film distribution studio, headquartered in Santa Monica and founded in Canada, and is the flagship division of Lionsgate Entertainment.  It is the largest and most successful mini-major film studio in North America. Wikipedia

Mark Erceg is the new CFO of Cerner. It’s not unusual for a new CFO to buy a substantial amount of stock. That’s often part of the terms of employment but Erceq is starting to look like he has a serious interest in making money from his investment.  Cerner stock has been a big laggard yet is a dominant player in the health care industry.  Cerner Corporation is an American supplier of health information technology services, devices, and hardware. As of February 2018, its products were in use at more than 27,000 facilities around the world. The company had more than 28,000 employees globally, with over 13,000 in Kansas City, Missouri. Wikipedia

Erceg has now bought three substantial chunks of stock. He purchased 10,655 shares on 2-22 at $70.43, 10,761 at $69.66 on 3-1, and most recently 10,547 shares at $71.13 on 3-8-21. This is starting to look like conviction buying and not window dressing. Nothing encourages conviction more than a CFO aggressively buying his company’s stock. At this point, we’re all in with Cerner and suggest you get on board the train.  Health care informatics is one of our big future macro themes and CERN is a great way to play it.

Director Steven Bensinger purchased 3,500 shares of Kinsale Capital Partners at $173.42.  Kinsale Capital GroupInc. is a specialty insurance group focused exclusively on the excess and surplus lines market in the United States. We use our underwriting expertise to offer terms on hard-to-place risks. Our goal is to provide long-term value to our stockholders by generating exceptional profit and growth.  Another director purchased 500 shares at $160.16.  Keep in mind though that the CEO just sold 12,500 of KNSL at $159.22 on 3-4 although it looks as if he was exercising options in the money.

Archer Daniels Midland VP Weber bought 5,095 shares at $58.40.  ADM has steadily been rising and based on this VP buy, I’d bet it continues.  When insiders buy at a 52 week high, it says one thing. Business is good and it’s going to get even better.  Weber came over to ADM as head of HR in August of 2020 after working at Lowes since 2016. My enthusiasm for this buy is tempered by that. I’m sure ADM expects its officer to hold a certain percentage of her pay in stock she buys on the open market or thru option exercises.

CEO Hewitt bought 9,350 shares of InnovAge Holding Corp at $26.62. InnovAge is a leading healthcare delivery platform focused on providing all-inclusive, capitated care to high-cost, dual-eligible seniors, which it defines as individuals who are 55+ and qualify for benefits under both Medicare and Medicaid.  The Denver, CO-based company was founded in 1969 and booked $607 million in revenue for the 12 months ended December 31, 2020.  They just went public at $21 on March 4th. Seems odd that she would be paying $26.62 for INNV days later.  We have to be careful about window dressing and this kinda smells.


 

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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.

We publish a subscription newsletter called The Insiders Report. The Insiders Fund often owns many of the stocks we blog about but it is for accredited investors only and sold by prospectus only.  We offer a free 30-day trial to the Insiders Report so you have nothing to lose by trying it out. Be sure to carefully read the TERMS OF SERVICE.

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 January 2021, 4th best in November 2020