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It’s hard to get excited about insider buying during an earnings blackout.  It’s even harder to get excited about it when there is only one investable idea but sometimes, maybe all the time, it just takes one good idea to make your fortune. That was certainly the case for Dustin Moscovitz, the CEO and Founder of Asana.  He’s been buying millions of dollars worth of stock in a company that he just brought public, a year ago for 3X the price it went public for. Normally it works the other way around.  That’s certainly what happened at Facebook where Moscovitz made his $Billions.

There’s a fun game on Wall Street analysts like to play.  It’s called relative value.  That’s how analysts value most cloud software companies.  It doesn’t matter that no one is profitable.  Everyone knows this is growth at all costs, a land grab, and in the end, there will be no competition left and the winner will own the category.  Somehow, perhaps magically, the faucet will get turned on and out will spew profits.  Because one unprofitable company is trading at some bizarre zero interest rate multiple, the other unprofitable company is valued against that benchmark. That’s relative value folks.

“Hogamus higamus, women are monogamous, higamus, hogamus men are polygamous.”

William James is purported to have announced this epiphany having ingested nitrous oxide.  At least we know what James was on. I’m not sure what analysts are high on other than a bull market and their heads in the clouds.

 

Finviz Chart

Name: Moskovitz Dustin A
Position: CEO Chairman 10% Owner
Transaction Date: 2021-10-01 Shares Bought: 500,000 Average Price Paid: $99.96 Cost: $49,981,963
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. Asana, Inc. offers a work management platform. The Company’s platform enables teams to orchestrate work, from daily tasks to cross-functional strategic initiatives. With its solution, Asana enables individuals to manage and prioritize across each of the projects. Its solution enables individuals to collaborate with teammates and have visibility into each team member’s responsibilities and progress. The Asana solution aids the team leads to manage work across a portfolio of projects or processes. The Company enables executives to communicate company-wide goals, monitor status, and oversee work across projects to gain real-time insights into which initiatives are on track or at risk. Asana is powered by its multidimensional data model called the work graph. The work graph captures and associates work units, the people responsible for executing those units of work, the processes in which work gets done, information about that work, and the relationships across and within the data.

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: Moskovitz is the poster boy for getting high on your own supply.  Asana went public in a direct listing on September 30th, 2020.  The stock soared to $28 on its inaugural day up from the reference price of $21, giving it an implied valuation of $4.2 billion.  A little over one year later ASAN closed Friday at $106.  Little does it matter the more ASAN sells, the less it makes. You see it’s the recurring revenue model, the cloud, dummy. During the latest quarter, ASAN had an operating loss of $60.05M versus the like period in the previous year’s loss of 33.58M. Revenue soared from $52M to $89M and they nearly doubled their operating loss?

In a normal world doubling your revenues and not improving your losing operating margin is a road map for financial disaster. Amazingly enough, Moskovitz can’t seem to buy enough of it. This is all the more ironic considering as the founder of Asana, he was by definition the one selling the shares last September 2020 when they did the direct listing.

But it gets stranger. While Dustin is spending $Millions to buy ASANA, his CFO, his Chief Counsel, and his COO are unloading the stock he is buying.  It’s good to have a helping hand when you’re selling stock. Instead of a stock buyback, Moskovitz buys it himself.  Maybe the rich are really different from you and me. They have their own reality distortion field and Wall Street scoops it up.

2021-10-01
Sale
2021-10-05
6:38 pm
Asana Inc. ASAN LACEY ELEANOR B
GC Corporate Secretary
17,480 $100.41 $1,755,133 129,359
(Direct)
View
2021-09-21
Sale
2021-09-23
6:17 pm
Asana Inc. ASAN Wan Tim M
CFO
20,000 $117.69 $2,353,798 478,103
(Indirect
Direct)
View

 

2021-09-01
Sale
2021-09-03
6:28 pm
Asana Inc. ASAN LACEY ELEANOR B
GC Corporate Secretary
17,480 $76.71 $1,340,835 129,359
(Direct)
View
2021-08-23
Sale
2021-08-25
6:28 pm
Asana Inc. ASAN Wan Tim M
CFO
20,000 $75.02 $1,500,316 478,103
(Indirect
Direct)
View
2021-08-02
Sale
2021-08-04
5:17 pm
Asana Inc. ASAN LACEY ELEANOR B
GC Corporate Secretary
17,480 $69.9 $1,221,853 129,359
(Direct)
View
2021-08-02
Sale
2021-08-04
5:06 pm
Asana Inc. ASAN Farinacci Chris
COO
26,072 $69.94 $1,823,509 289,000
(Direct)
View
2021-07-21
Sale
2021-07-22
5:15 pm
Asana Inc. ASAN Wan Tim M
CFO
20,000 $67.47 $1,349,348 478,103
(Indirect
Direct)
View
2021-07-01
Sale
2021-07-02
4:52 pm
Asana Inc. ASAN LACEY ELEANOR B
GC Corporate Secretary
20,000 $62.77 $1,255,307 129,359
(Direct)
View
2021-07-01
Sale
2021-07-02
4:51 pm
Asana Inc. ASAN Farinacci Chris
COO
26,072 $62.78 $1,636,799 289,000
(Direct)
View

 

Finviz Chart

Name: Wilder C John
Position: Director
Transaction Date: 2021-09-30  Shares Bought: 60,018 Average Price Paid: $62.43 Cost: $3,746,982
Company: Evergy Inc. (EVRG)
Evergy is an American investor-owned utility (IOU) with publicly traded stock headquarters in Topeka, Kansas, and in Kansas City, Missouri. The company was formed from a merger of Westar Energy of Topeka and Great Plains Energy of Kansas City, Missouri, the parent company of Kansas City Power & Light. Evergy is the largest electric company in Kansas, serving more than 1.6 million residential, commercial, and industrial customers in the state’s eastern half. Evergy has a generating capacity of 16,000-megawatt electricity from its over 40 power plants in Kansas and Missouri. Evergy service territory covers 28,130 square miles (72,900 km2) in eastern Kansas and western Missouri. Evergy owns more than 13,700 miles (22,000 km) of transmission lines and about 52,000 miles of distribution lines. Evergy is committed to delivering clean, safe, reliable energy sources today and well into the future. So they’re embracing alternative energy sources to generate more power with less impact on our environment and adopting new technologies that let their customers manage their energy use in ways that work for them. Whether it’s new ways to connect with them, electric vehicle charging stations, or the next innovation around the corner, they’re dedicated to empowering a better future. It generates electricity through coal, hydroelectric, landfill gas, uranium, natural gas, oil sources, and solar, wind, and other renewable sources. The company has approximately 10,100 circuit miles of transmission lines, 39,800 circuit miles of overhead distribution lines, and 13,000 circuit miles of underground distribution lines. It serves approximately 1,620,400 customers, including residences, commercial firms, industrials, municipalities, and other electric utilities.

Mr. Wilder is the Executive Chairman of Bluescape. He serves on the boards of directors of several private portfolio companies and has previously served on the board of many private and public companies, including NRG Energy, Inc. and TXU Corp. He served in executive officer roles in TXU Corp., Entergy Corp., and Royal Dutch/Shell Group. Mr. Wilder received his bachelor of science in business administration from Southeast Missouri State University and holds a master of business administration from the University of Texas.

Opinion:  I just heard Elon Musk at his annual shareholder meet-up in Austin tell everyone that electric utilities are going to experience explosive growth due to EV vehicles. I don’t know if the projections about the growth rates of EV adoption are accurate but one thing is certain, electricity consumption is going up. I would buy every electric utility insiders are buying. Right now that’s EVERGY. Load the boat. Once the market realizes interest rates are not going up very much, they’ll flock back to this space.  Unfortunately, it brings to mind the proverbial Wall Street wisdom, “What’s the difference between being right and wrong? None.”  We are early on the utilities call but when things change, they change fast in the market. Everyone seems to come to the same conclusion at nearly the same time.

In a market rife with risk, there is no surer thing than you’ll pay your electric bill before you pay for anything else. Life without electricity is not liveable.  Publicly traded electric utilities are monopolies with guaranteed cost inflation allowed to be passed through to the customer. Yes, there could be a lag but that’s just short-term thinking.

Think longer than tomorrow.  Insiders are buying big at EVRG and you should too.  I expect to double my investments in regulated electric utility stocks in the next five years (maybe sooner) as the market comes around to seeing the obvious. Electricity usage is life itself and going through the roof.  I just heard Elon Musk say that at his annual Tesla shareholder meeting. Musk was opining, “you really need for a sustainable energy future, you have to address electricity at the homeowner level. This is essential. But there will still be a very prosperous future for utilities because electric power will approximately double. And then if you transition heating to electric as well, it approximately triples”.

Evergy is in the enviable position of not only being a monopoly but they are in the long term process of replacing their costs of energy, natural gas and coal, with renewables like wind and solar. Kansas and Missouri are in some of the best wind corridors in the U.S. Not only do they get to replace short-term cost inputs with long-lived assets that provide “free power” from wind and sun, but utilities are also likely to get government-backed incentives like tax breaks and guarantees to make the world greener by reducing carbon emissions. Oh my, it’s hard to see how it gets better than this.

Wilder is part of an investment group that has announced its intention to invest heavily in EVRG along with the activist investor group, Elliott.  They didn’t get rich by being stupid. Normally we exclude hedge funds from our insider buying analysis but EVRG is a case of hedge funds buying, the CEO and CFO buying. That’s a powerful combination too obvious to ignore.

 

Finviz Chart

Name: Litchfield Steven G
Position: Chief Financial Officer & Chief Corporate Strategy Officer
Transaction Date: 2021-10-04 Shares Bought: 10,414 Average Price Paid: $47.99 Cost: $499,730
Company: Maxlinear Inc. (MXL)
MaxLinear is a global, New York Stock Exchange-traded company (NYSE: MXL) where the entrepreneurial spirit is alive and well. They are a fabless system-on-chip product company striving to improve the world’s communication networks for everyone through their highly integrated radio-frequency (RF), analog, digital, and mixed-signal semiconductor solutions for access and connectivity wired and wireless infrastructure, and industrial and multi-market applications. They hire the best people in the industry and engage them in some of the most exciting opportunities that connect the world we live in today. Their growth has come from innovative, bold approaches to solving some of the world’s most challenging communication technology problems efficiently and effectively. MaxLinear began by developing the world’s first high-performance TV tuner chip using standard CMOS process technology. Others said they couldn’t achieve the extremely high-performance requirements using CMOS, but they proved them wrong and achieved enduring global market leadership with their designs. Since then, they’ve developed a full line of products that drive 4G and 5G infrastructure; enable data center, metro, and long-haul optical interconnects; bring 10Gbit to the home; power the IoT revolution; and enable robust and reliable communication in harsh industrial environments. They’ve expanded through organic growth and several acquisitions that have perfectly complemented their existing portfolio and enabled them to deliver complete end-to-end solutions in their target markets. Their headquarters are in Carlsbad, near San Diego, California. They also have major design centers in Irvine and San Jose, California; Vancouver, Canada; Valencia, Spain; Bangalore, India; Villach, Austria; Munich, Germany; Israel; and Singapore. They have approximately 1,500 employees, a substantial majority of whom have engineering degrees and include masters and Ph.D. graduates from many of the world’s premier universities..

Mr. Litchfield most recently served as Executive Vice President and Chief Strategy Officer of Microsemi Corporation, a provider of analog and mixed-signal semiconductor solutions acquired by Microchip Technology, Inc. in May 2018. Mr. Litchfield served in that position from 2009 until the closing of the acquisition by Microchip. Previously, he served as Microsemi’s Vice President, Analog and Mixed-Signal Group from 2006 to 2009, as its Vice President, Corporate Marketing and Business Development from 2003 to 2006, and as its Director, Business Development from 2001 to 2003. Before joining Microsemi, Mr. Litchfield was an equity research analyst at Banc of America Securities and a production engineer at Toyota Motor Corporation. Mr. Litchfield also serves on the board of directors of several early-stage technology companies that are not publicly traded.

Opinion:  This is a false flag since the purchases reported were effected pursuant to a Rule 10b5-1 trading plan adopted on August 2, 2021, by the Reporting Person. That’s misleading. I don’t know why Litchfield is buying when at the same time the CEO, Chairman, and 10% owner, Seendripu is selling 40,086 shares at $48.84 on a similar 10b5-1 plan.  When in doubt, do nothing. That’s what we are doing.

 

Finviz Chart

Name: Levenick Zachary
Position: Director
Transaction Date: 2021-10-01  Shares Bought: 30,000 Average Price Paid: $10.11 Cost: $303,189
Company: Barnes & Noble Education Inc. (BNED)
Barnes & Noble Education, Inc. operates bookstores for college and university campuses and K-12 institutions in the United States. It operates in three segments: Retail, Wholesale, and Digital Student Solutions. The company sells and rents new and used print textbooks, digital textbooks, and publisher-hosted digital courseware through physical and virtual bookstores, as well as directly to students through Textbooks.com. It also offers First Day and First Day Complete access programs; BNC OER+, a turnkey solution for colleges and universities, that offers digital content, such as videos, activities, and auto-graded practice assessments; and general merchandise, including collegiate and athletic apparel, school spirit products, lifestyle products, technology products, supplies, and convenience items. In addition, the company sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions; direct-to-student subscription-based writing services; and Bartleby, a direct-to-student subscription-based offering that includes textbook solutions, expert questions and answers, AI-based writing assistance, and tutoring services. As of June 29, 2021, it operated 769 physical college and university bookstores; and 648 virtual bookstores. The company also operates 148 True Spirit e-commerce websites; pop-up retail locations; and 77 customized cafés and 12 stand-alone convenience stores. Barnes & Noble Education, Inc. was founded in 1965 and is headquartered in Basking Ridge, New Jersey.

Zachary Levenick was elected to the Board in October 2020. Mr. Levenick has been a private investor in real estate and public and private securities with a focus on growing innovative or disruptive businesses in established industries, including financial services, female health, and fitness since January 2019. From 2002 to January 2019, Mr. Levenick served in various roles at Taconic Capital Advisors, LP (“Taconic”), a multibillion-dollar New York-based private investment firm, most recently serving as Principal, Co-Head of European Investing beginning in 2011. During his time at Taconic, Mr. Levenick co-managed the firm’s London-based European operations and was Portfolio Manager for European Equities investing, were focus areas included consumer products, retail, and general industries. He also established and oversaw Taconic’s public and private investment efforts in Brazil, Mexico, Chile, and Argentina, where focus areas included education and logistics.

Opinion: Printed Books are dead, relics of disruption, pockets of life to be found only on college campuses where universities in an incestuous cycle mandate that students buy the overpriced hard copy books of their professors. Something like that- or that’s the new Barnes and Noble. The ubiquitous book stores and coffee shops were on life support before the pandemic, then schools shut down, colleges went virtual and everything but frogs and locusts coming down from the heavens besieged the BNED business model.  Things are normalizing and Barnes and Noble are coming back to life. As far as opening plays, it’s a good one but I’m passing for now. I just don’t see the upsides from where it’s run.

 


 

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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