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Another boring week but three insiders are worth taking a look at.  This post will examine the few hardy souls that stepped up and bought their company’s stock and the reasons why. Archer Daniels seems particularly enticing.

Name: Schneider Ryan M
Position: Director
Shares Bought: 1,300, Average Price Paid: $384.36, Cost: $499,668
Company: Anthem Inc. (ANTM) Anthem, Inc., is a provider of health insurance in the United States. It is the largest for-profit managed health care company in the Blue Cross Blue Shield Association. As of 2018, the company had approximately 40 million members. Anthem is ranked 29th on the Fortune 500. Prior to 2014, it was named WellPoint, Inc. Wikipedia

Opinion: Ryan M. Schneider serves as President, Chief Executive Officer, Director of Realogy. He has been on the board of Anthem since 2019. Schneider bought a similar dollar amount of Anthem stock back in the first part of February 2021 at $296.03.  That worked out well for him, it’s up to $348, and he’s back for more. The recent pullback in the stock is likely the spark.  Several analysts cheerlead the stock on Q2 results but it went down anyway. That’s the summer doldrums for you. Or could it be more entrenched and secular?

The Progressive wing of the Democratic wants universal health care and currently, the health care insurance industry feels an existential threat from this.  If you look at the chart above or expand the timeline by clicking on the chart and resizing it in another frame, you can see that Anthem has been in a holding pattern for two years from 2019 until March  2021 for this very reason most likely.  It seems to have broken out of the $300 ceiling in March of this year.  If you believe that Biden is not beholden to the Progressive wing or that the health insurance industry just like the oil and gas industry will be part of the solution to any radical change and not demolished and cast asunder, this is exactly the kind of high-quality name you want to own in a tech-heavy market that’s starting to cave in on its own overrepresentation in the indices.

Anthem stock appears to be basing and absent any other factors (which is always a risk), this kind of show of support from a business-savvy insider with a good track record may be a very solid signal.  We are buying and selling puts as well to create a slightly lower entry point.

 

Name: Martin J Landis
Position: Director
Shares Bought: 11,200, Average Price Paid: $191.51, Cost: $2,144,858
Company: Crown Castle International Corp (CCI)
Since 1994, Crown Castle has worked around the country to build and maintain the infrastructure behind the world’s most revolutionary technologies. This comprehensive portfolio of towers, small cells, and fiber gives people and communities access to essential data, technology, and wireless service and opens the door to countless opportunities and possibilities. We continue to work closely with wireless carriers, businesses, technology companies, governments, and communities to make sure these transformative ideas and innovations find their way to those who rely on them.

Crown Castle owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every primary U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service – bringing information, ideas, and innovations to the people and businesses that need them.

J. Landis Martin serves as Independent Chairman of the Board of the Company. Mr. Martin has been a director on our Board from 1995 through November 1998 and from November 1999 to the present. Mr. Martin has served as Chairman of our Board since May 2002. Mr. Martin is Chairman of the private equity firm Platte River Equity, LLC and has been a Managing Director since its founding in November 2005. Mr. Martin is also lead director of Apartment Investment Management Company and Intrepid Potash, Inc., each a publicly held company. Mr. Martin served as a director on the Board of directors of Halliburton Company, a publicly held company, from 1998 until 2018, having served as lead director from 2009 to 2018.

Opinion:  Always buy CCI when Landis does. He doesn’t hit the dead bottom but he’s got a great track record at timing his investments in CCI.  The cellular tower leasing business has got strong secular winds at its back. 5g rollout is in the first innings and both Democrats and Republicans support 5G as part of the desire to have broadband internet everywhere.

You won’t get rich off the 2.76% dividend yield for this REIT but you don’t have to worry about the dividend and it will most likely increase in time moving the stock price higher with it. The two big risks to this investment thesis are rising interest rates dragging down all interest-rate sensitive sectors such as REITs.  The other risk is technological obsolescence.  Will Space X and Elon Musk’s global constellation of low orbit satellites be a competitive threat to 5G broadband internet?  I’m sure it will be an option but I think the demand for broadband is insatiable for the next several years.   Rates are likely to rise but at a very muted pace.  CCI is a buy on any pullbacks and we are buyers on this one.  You do have to be careful what you pay though as this is not going to be a runaway growth stock


Name: Healy James
Position: Director
Shares Bought: 2,400, Average Price Paid: $113.00, Cost: $271,200
Company: Natera Inc. (NTRA)
Natera, Inc. is a clinical genetic testing company based in Austin, Texas, specializing in non-invasive, cell-free DNA (cfDNA) testing technology, focusing on women’s health, cancer, and organ health. Natera operates CAP-accredited laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) in San Carlos, California, and Austin, Texas.

Natera is a pioneer and global leader in cell-free DNA testing from a simple blood draw. The company’s mission is to change the management of disease worldwide with a focus on women’s health, oncology, and organ health. Natera operates ISO 13485-certified and CAP-accredited laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) in San Carlos, California, and Austin, Texas. It offers proprietary genetic testing services to inform obstetricians, transplant physicians, oncologists, and cancer researchers, including biopharmaceutical companies and genetic laboratories through its cloud-based software platform. Their team includes clinicians, scientists, biostatisticians, researchers, and laboratory professionals from around the world.

Dr. James I. Healy M.D., Ph.D., serves as Independent Director of the Company. Dr. Healy has been a general partner at Sofinnova Investments, Inc. board of directors believes that Dr. Healy is qualified to serve as a director due to his significant medical background, extensive experience investing and working in the life science industry, and his extensive service on the boards of directors of other public and private life sciences companies.

Opinion:  I’m really getting desperate for insider buying as Healy bought 2400 shares while other officers are unloading more stock, but at least it’s either tax-related option exercise selling or the nebulous signals from a 10b5-1 trading plan.  One look at the chart tells you it hasn’t been a fun ride for Natera shareholders recently but they’re still up a little on the years. This one doesn’t get me excited.

Shares Bought: 16,790, Average Price Paid: $59.54, Cost: $999,677
Company: Archer Daniels Midland (ADM)
The Archer-Daniels-Midland Company, commonly known as ADM, is an American multinational food processing and commodities trading corporation founded in 1902 and headquartered in Chicago, Illinois. The company operates more than 270 plants and 420 crop procurement facilities worldwide, where cereal grains and oilseeds are processed into products used in food, beverage, nutraceutical, industrial, and animal feed markets worldwide. ADM ranked No. 54 in the 2020 Fortune 500 list of the largest United States corporations.

The company also provides agricultural storage and transportation services. The American River Transportation Company, along with ADM Trucking, Inc., are subsidiaries of ADM. At ADM, they unlock the power of nature to provide access to nutrition worldwide. With industry-advancing innovations, a complete portfolio of ingredients and solutions to meet any taste, and a commitment to sustainability, they give customers an edge in solving the nutritional challenges of today and tomorrow. They’re a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company. Their breadth, depth, insights, facilities, and logistical expertise give them unparalleled capabilities to meet needs for food, beverages, health and wellness, and more. From the seed of the idea to the outcome of the solution, we enrich the quality of life the world over.

Juan R. Luciano is chairman of the board of directors, president, and chief executive officer of ADM. Luciano joined ADM in 2011 as executive vice president and chief operating officer. He was named president in February 2014, and in January 2015, he became the ninth chief executive in ADM’s 112-year history. He became chairman of the board in January 2016.
Under Luciano’s leadership, ADM has undergone a remarkable evolution, building on more than a century of heritage to create a global nutrition business with an industry-leading array of ingredients and solutions that are opening the door to growth opportunities in key global macro trend areas. He has spearheaded the increased use of innovative technologies to meet customer needs and led a strategic growth campaign that has expanded ADM’s global footprint, building capabilities and adding talent and expertise to create value at every part of the global value chain.

Opinion:  I like this chart.  Archer Daniels looks like it’s ending its sharp descent down from the double top at $68.  One of the things I do at The Insiders Fund involves analyzing chart patterns. I don’t talk much about it on these posts but every day I run through our entire holdings, anywhere from 20-60 securities, and make a mark alongside it if I think it’s going up, down, or flat. It’s not that I’m going to trade on this or anything like that but I do want to understand the rhythm for a lack of a better word of every stock I own.  ADM wants to reverse its slide and resume its upward trend.  A $1 million purchase from the CEO is the kind of kick in the butt that the stock needs.

The question though is Luciano a chart reader like me or does he see something special as the CEO of the company that motivates him to buy. This of course is a ludicrous question and we know the answer to that.  All insiders have an intuitive feel for their stock price but are business managers, not stock jockeys. When I was running a company, I had little time for stock market analysis and I doubt that Luciano is any different.  So why spend $1 million now buying his company’s stock?

ADM has a forward P.E. of just 13.4 and a dividend yield of 2.48%, both way below the S&P 500 currents price-earnings and dividend ratios Archer Daniels operates on low margins, an operating profit margin of just 2.60% last year, and sales have been range-bound for years. What will it take to get this agricultural behemoth stock price to move?  Either an increase in revenues or better margins in my opinion and his large purchase might indicate one or both of those is about to happen.

But we don’t have to guess which is going to happen.  Luciano himself is telling us in the latest earning release. ADM reported Q2 revenue $22.93M, consensus $17.88B. “It was yet another excellent quarter for ADM, as our team delivered record earnings, with strong year-over-year profit growth across all three business units,” said Chairman and CEO Juan Luciano. “This is a very different ADM than even a few short years ago, and our transformation is far from over. Our productivity efforts are powering our execution, and – combined with our unparalleled global footprint and strong risk management – supported outstanding results in both Ag Services & Oilseeds and Carbohydrate Solutions. And we’re driving innovation, which helped support record top-line and bottom-line results in Nutrition; in fact, we are now raising our expectations of full-year profit growth for Nutrition to 20 percent. “We’re excited about our growth trajectory as we continue to expand our participation in large and fast-growing categories, from alternative proteins to renewable green diesel to plant-based biosolutions, with all of our strategic efforts underpinned by our unique opportunity to use ADM’s integrated value chain to advance decarbonization of the food and agriculture industries. Given our great start to the year and our expectation of continued momentum in the second half, we are confident in delivering very strong full-year earnings, and we remain well-positioned for robust, sustained growth in the years to come.”

Bottom line- we like ADM and will be building a healthy position here.


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$TUEM is up a whopping 36% after a series of buys by the new management. Tuesday Morning took a dump after reporting its latest quarter. The new management stepped up and bought a ton of stock. I bet they wish they could avoid short swing rule insiders to hold for six months

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Insiders sell the 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 many vendors, and SECForm4 is one of the most customer-friendly and responsive I’ve used.

We publish a subscription newsletter called The Insiders Report.  We offer a free 30-day trial, 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 are 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 me. 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, 4th Best in November 2020, 4th Best in January 2021 (I kid you not)