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The S&P was down 1% for the week and the only insider worth mentioning, GBX, was down 5%.  New index highs are the norm but there was scant insider buying.  Corporate officers and directors brazenly unloaded hundreds of $millions dollars worth of company stock during the earnings blackout period, shielded by the loophole that 10b5-1 provides. This post will examine the few hardy souls that stepped up and bought their company’s stock.

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Name: Furman William A
Position: CEO Chairman
Shares Bought: 100,000, Average Price Paid: $43.08, Cost: $4,307,659
Company: The Greenbrier Companies. (GBX)
Greenbrier, headquartered in Lake Oswego, Oregon, is a leading international supplier of equipment and services to global freight transportation markets. Greenbrier designs build and market freight railcars and marine barges in North America. Greenbrier Europe is an end-to-end freight railcar manufacturing, engineering, and repair business with Poland, Romania, and Turkey that serves customers across Europe and in other geographies as opportunities arise. Greenbrier builds freight railcars and rail castings in Brazil through two different strategic partnerships.

The Greenbrier Companies is a leading supplier of marine and rail transportation equipment and services, powering the movement of products worldwide. Greenbrier’s innovation and engineering expertise pairs with its capacity to build and repair transportation equipment. It allows them to provide an unrivaled level of service to their customers across the Americas, Europe, and the GCC countries. With a railcar lease fleet of over 10,300 railcars, Greenbrier also provides asset management services for nearly 400,000 railcars. Their unique railcar leasing syndication platform brings them into contact with the world’s leading fixed asset investors. They have delivered over 21,000 railcars in a single year and maintain the capacity to produce over 35,000 railcars annually.

William A. Furman serves as Chairman of the Board, Chief Executive Officer of the Company. Mr. Furman has served as a member of the Board since 1981 and as the Company’s Chief Executive Officer since 1994. He has served as the Chairman of the Board of Directors since January 2014. As a founder, Mr. Furman has been associated with the Company and its predecessor companies since 1974. He has led the Company through incredible growth over the last decade, including international expansion and significantly increased market share in North America.

Opinion: GBX Chairman and CEO William Furman is spending real money, $4.3 million to buy his company’s falling knife stock. In classic Buffett manner, his largest purchase year to date was at the cheapest price. Buffett likes to say if the stock declines, it’s on sale, buy more. Most people do the opposite.  Furman spent about $4.5 million in three prior purchases this year at higher prices and then Wednesday, stepped up and bought his largest single purchase to date.

The market, though, isn’t buying into it.  For that matter neither are his directors or employees. A Director sold 2000 shares Friday, 3 VP types sold 10,000, 8500, and 9364 shares in February.  These were flat-out sales, not tax-related option exercises or 10b5-1 sales. I guess they didn’t get the memo that the boss was buying. I typically don’t read too much into insider sales but it’s not a vote of confidence to be selling the stock that the boss is buying.

Biden issues a statement purportedly attacking the monopolistic nature of railroads and the group got crushed. It’s hard to say how it really impacted a rail car leasing company, though. Publicly complaining or even executive orders doesn’t release railroads from contractual leasing obligations but it could damper enthusiasm for expansion if the Government is attacking your industry.

Bottom line- hold fast but don’t bet big on GBX. The railroads are complaining about a shortage of railcars. The founder of the company is betting big on his business but the group is a laggard. Neither the railroads nor the finance sector stocks are acting well.  It goes back to the adage, don’t buy a great house in a bad neighborhood expecting big appreciation.

 


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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 SEC’ss 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)