For trade, details click on this link to the trades 

The S&P was up 2% for the week and is up nearly 15% YTD.  No one knows what the direction is for the next six months but I would not take the under. Perhaps the most unusual thing is the supply of money seems endless. I think it’s a record year for IPOs, almost daily SPAC issuance, and all kinds of new and quite stupid crypto investments. It really seems such a waste that so much brainpower and money have gone toward solving problems that don’t exist.  The centralized finance system seems to work well enough that it’s a frivolous and wasteful endeavor to create an unproven Defi (decentralized finance) system for a problem that doesn’t exist in this country. How about solving homelessness or something worthy of the effort?

 


Name: Moskovitz Dustin A
Position: CEO Chairman 10% Owner
Shares Bought: 320,000, Average Price Paid: $63.46  Cost: $20,306,295
Company: Asana Inc. (ASAN)
Asana is a web and mobile application designed to help teams organize, track, and manage their work. Forrester, Inc. reports that “Asana simplifies team-based work management. Asana helps teams orchestrate their work, from small projects to strategic initiatives. Headquartered in San Francisco, CA, Asana has more than 100,000 paying customers and millions of free organizations across 190 countries. Global customers such as Amazon, Japan Airlines, Sky, and Under Armour rely on Asana to manage everything from company objectives to digital transformation to product launches and marketing campaigns.

Dustin Moskovitz is the co-founder and CEO of Asana. As Asana’s CEO, Dustin is dedicated to creating a product that helps the world’s teams collaborate effortlessly, in addition to leading the company’s award-winning culture. Prior to founding Asana, Dustin co-founded Facebook and served as the company’s first Chief Technology Officer and VP of Engineering.

Opinion: I continue to be blown away by the staggering sums Moskovitz is deploying buying a stock where he already has control. He owned over 48% of the Company on the 2020 year-end SEC filing. Since the beginning of June this year, he has bought 3,150,000 shares at a cost of $163 Million dollars.  Even more peculiar is that he is buying the stock his fellow insiders are unloading. On July 2nd, the COO and General Counsel exercised options at $4.02 and sold all of them at prices of $62.78, just pennies below the 160,000 shares Moscovitz bought at $63.34. There is nothing illegal about this as far as I can tell but common sense fair play would demand an explanation.  Mos

Come to think of it, If I sold in the $30’s just a month ago, I would certainly be pissed. In fact, if I was the general counsel, I would be a little worried about the paper trail that I just exercised stock at $4 and sold it at $62 and I knew the CEO had a 10b5-1 plan in place that was not disclosed to the public.

 

Name: Smith Thomas W
Position: 10% Owner
Shares Bought:200,000, Average Price Paid: $23.84, Cost: $4,767,553
Company: Vapotherm Inc (VAPO)
Vapotherm Inc. is a publicly held corporation based in Exeter, New Hampshire, founded in 1999 as a medical device manufacturer after creating the first heated and humidified high flow therapy nasal cannula system.

Vapotherm, Inc. is the inventor of a high-flow nasal cannula and advanced form: Vapotherm high-velocity therapy. For respiratory distress patients presenting in the ED ICU, high-velocity therapy can provide oxygenation and Mask-Free NIV®—ventilatory support with the comfort of heated humidified high flow. Vapotherm technology is a breakthrough in respiratory care — a fast and safe way to provide treatment for undifferentiated respiratory distress with one single tool.

Opinion: Honestly I don’t know what to make of this. VAPO has been a disaster for shareholders but like lots of medical device and biotech stocks, they can be miserable investments until they’re NOT.  Whether VAPO is about to turn the corner, is something I can’t determine.  They just held their inaugural investor day and seem to have convinced at least one analyst that the turn is in sight. BTG analyst Thibault wrote that ” VAPO set a goal of doubling revenue from $85M in 2021 (midpoint of guidance range) to $170M in 2026, as well as hitting 65%+ GM by 2026. We see a long runway for growth and reiterate our Buy rating with a $45 PT.”

10% Owner Thomas Smith just shelled out $4.7 million. He also invested $9.8 million at $32 back in August 2020 so his track record is not so great. I’d feel a lot better about VAPO if there were members of the executive management buying their stock.

 

Name: Jones Christopher Dean
Position: Sr. Vice President & Chief Financial Officer
Shares Bought: 21,595, Average Price Paid: $8.62, Cost: $186,073
Company: Nortech Systems Inc (NSYS)
Nortech is a full-service electronics manufacturing services (EMS) provider of complex interconnect solutions, printed circuit board assemblies, diagnostic repair, and integration services, including higher-level assemblies and box build for a wide range of industries. Markets served to include industrial and commercial equipment, medical devices, and aerospace & defense, and industrial markets. Its design services span concept development to commercial design and include medical device, software, electrical, mechanical, and biomedical engineering. Its manufacturing and supply chain capabilities are vertically integrated around wire/cable/interconnect assemblies, printed circuit board assemblies, and system-level assembly, integration, and final test. 

 He has a depth of financial expertise and excellent strategic skills in rapid growth businesses. Before joining Spectrum Brands, Mr. Jones worked in operations finance for MEMC Electronic Materials and Express Scripts. Mr. Jones began his career as a US Naval officer and an Assistant Professor of Naval Science at Boston University.

Opinion: Our favorite insider buying behavior is when the CFO is buying. Mr. Jones was named Senior Vice President & CFO in November 2020. Previously, Mr. Jones held a range of key leadership positions at Spectrum Brands Holdings, most recently Vice President and Corporate Controller. I would expect a lot of M &A with Mr. Jones’s past experience at Spectrum. Although not a large purchase, it’s part of a 10b5-1 plan that he has been regularly purchasing stock on.  With secular wind at their backs, this looks like a good small-cap buy and we’ll probably buy some of the stock on a pullback.

 

Name: Perestroika
Position: Director 10% Owner
Shares Bought:1,000,000, Average Price Paid:$4.53, Cost: $4,530,000

Name: Mohn Frederik Wilhelm
Position: Director 10% Owner
Shares Bought:1,000,000, Average Price Paid:$4.53, Cost: $4,530,000
Company: Transocean Ltd. (RIG)
Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business, focusing on deepwater and harsh environment drilling services. It believes that it operates one of the most versatile offshore drilling fleets in the world. Transocean owns or has partial ownership interests and operates a fleet of 37 mobile offshore drilling units, including 27 ultra-deepwater floaters and ten harsh environment floaters. In addition, Transocean is constructing two ultra-deepwater drillships.

At Transocean, they are committed to conducting our business with the highest level of integrity and earning the trust placed in us. their Code of Integrity contains our guiding ethical principles. It sets forth the behaviors they expect of all Transocean employees, directors, officers, and our business partners and suppliers.

Perestroika has made over six trades of the Transocean Ltd stock since 2018, according to Form 4 filed with the SEC. Most recently, Perestroika bought 1,000,000 units of RIG stock worth $4,530,000 on 25 June 2021. The most significant trade Perestroika’s ever made was buying 5,000,000 units of Transocean Ltd stock on 15 June 2021 worth over $20,900,000.

Opinion: The oil and gas sector is one of the best performing sectors if not the best this year. RIG became almost a household word after Transocean paid a $1 billion civil penalty to resolve alleged violations of the Clean Water Act resulting from the discharge of oil into the Gulf of Mexico from the loss of the Deepwater Horizon and the April 20, 2010 blowout of the Macondo Well.  The company is domiciled in Switzerland and Perestroika ownership is affiliated with Cyprus, a home for Russian money laundering activities.  I think if you peel back the onion on this one, you will go down a rabbit hole of convoluted ownership entities. Frankly, it’s too complex for us.  The entire industry is threatened by climate change.   When you get blue-chip names like Exxon and Chevron with high dividends on sale, I’m passing on RIG.


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The World Health Organization (WHO) confirmed it skipped the Greek letters “nu” and “xi” in naming its new COVID-19 variant, which it dubbed the “omicron” variant. https://www.theinsidersfund.com/2021/11/the-world-health-organization-who-confirmed-it-skipped-the-greek-letters-nu-and-xi-in-naming-its-new-covid-19-variant-which-it-dubbed-the-omicron-variant/

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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 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.  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 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, 4th Best in November 2020, 4th Best in January 2021 (I kid you not)