Curious how well insiders are doing with their buys? Click on this link or image above to scroll through the significant buys of the last year.

If you thought last week was ugly, this Friday took the cake. We’re now testing the lows set this year and if you’re not nervous about the market, you’re in denial. The S&P 500 Index slumped on Friday, capping its biggest monthly decline since March 2020.

According to Bloomberg, the benchmark gauge closed down 3.6%. All 11 major industry groups declined, with the consumer discretionary, real estate, and information technology sectors leading losses. The tech-heavy Nasdaq 100 Index fell 4.5%, closing out its worst month since 2008, while the Russell 2000 index decreased 2.8%.

The few buys that attracted our attention are outlined below. There are some takeaways here that are important.

 

Finviz Chart

Name: Lego Catherine P
Position: Director
Transaction Date: 2022-04-26 Shares Bought: 1,736 Average Price Paid: $460.35 Cost: $799,168.00
Company: Lam Research Corp (LRCX)
Lam Research Corporation is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Company designs manufacture, markets, refurbished, and services semiconductor processing equipment used in the fabrication of integrated circuits (ICs). It operates through the manufacturing and servicing of wafer processing semiconductor manufacturing equipment segment. Its products and services are designed to help its customers build performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive vehicles, and data storage devices. Non-volatile memory (NVM), dynamic random-access memory (DRAM), and logic devices are among its customers, as are semiconductor memory, foundries, and integrated device makers (IDMs). Nanoscale applications enablement, chemistry, plasma and fluidics, and advanced systems engineering are among the services it provides.

Lam Research Corporation’s Independent Director is Catherine P. Lego, CPA. Lego Ventures LLC, a consulting services firm for early-stage electronics companies, was founded by Catherine P. Lego in 1992. She formed The Photonics Fund, LLP, an early-stage venture capital investment business focusing on investing in components, modules, and systems firms for the fiber optics telecommunications sector, and served as its General Partner from December 1999 until December 2009. From 1981 through 1992, Ms. Lego was a general partner at Oak Investment Partners, a venture capital business. Prior to joining Oak Investment Partners, she worked for the accounting company Coopers & Lybrand as a Certified Public Accountant. Ms. Lego has been a member of the board of directors of Cypress Semiconductor Corp., an advanced embedded solutions company for automotive and other products, since September 2017, where she serves on the audit and nominating and governance committees; and IPG Photonics Corporation, a high-power fiber laser, and amplifier company for diverse applications.

Opinion: Semiconductors have had a terrible run but all you hear is that we are short on supply. From Ford Motors to Whirlpool, everyone is complaining that their production is limited by semiconductors. If there was ever a clearer signal that the economy is long semis, I don’t know what it is. We’ve had a money-losing position in Intel for a long time but are convinced that in time, the CEO Pat Gelsinger, will lead the greatest turnaround in history, in his own words. It’s inevitable in my thinking that the practice of fabless semiconductor manufacturing made in Taiwan is a disaster waiting to happen. So it was encouraging to see Director Lego purchasing this leading semiconductor tools company. I’m hoping to see some buys in Applied Materials. Lam Research is reasonably priced, profitable, and growing.  Its discounted cash flow valuation of $782.28 is a far cry from Friday’s closing price of $465.76.

 

Finviz Chart

Name: Prager Richard Leon
Position: Director
Transaction Date: 2022-04-22 Shares Bought: 1,000 Average Price Paid: $271.25 Cost: $271,245.00
Company: Marketaxess holdings inc (MKTX)
MarketAxess Holdings, Inc. is an electronic trading platform that enables financial professionals to trade corporate bonds and other fixed-income securities. It also provides data and analytical tools to assist its clients in making trading decisions, as well as electronically transferring order information amongst trading counterparties to make the trading process more efficient. The firm’s unique trading system enables institutional investor clients to concurrently seek competitive, executable bids or offers from several broker-dealers and execute trades with the broker-dealer of their choosing. Richard M. Mcvey created the company on April 11, 2000, and it is based in New York, NY.

Since July 2019, Richard L. Prager has been a Senior Advisor at Tresata, a data analytics startup. Mr. Prager was a Senior Managing Director at BlackRock and a member of the firm’s Global Executive Committee from May 2016 until July 2019. He oversaw the firm’s global trading, cash management, and securities lending teams, as well as overseeing BlackRock’s global investment platform for both active and passive portfolios, as well as the iShares ETF business. Mr. Prager joined BlackRock as a Managing Director in their Financial Market Advisory division in 2008, amid the financial crisis, where BlackRock aided the US government and several financial firms in managing the crisis.

Opinion:  Marketaxess is the leading platform to buy bonds online. This is a business we love but are not sure how much we want to pay for it. It seems that 40 times earnings is too rich a price to pay for this exclusive property. It definitely deserves a premium but we don’t want to pay fair value for anything. It is bargains we are looking for and MKTX is not one, not yet anyway.

 

Finviz Chart

Name: Bettinger Walter W
Position: CEO
Transaction Date: 2022-04-26 Shares Bought: 26,108 Average Price Paid: $68.55 Cost: $1,789,688.00

Transaction Date: 2022-04-25 Shares Bought: 36,640 Average Price Paid: $69.49 Cost: $2,545,960.00
Company: Schwab charles corp (SCHW)
The Charles Schwab Corporation is a holding corporation for savings and loans. The company provides wealth management, securities brokerage, banking, asset management custody, and financial advising services through its subsidiaries. Investor Services and Advisor Services are the two areas of the company that provides financial services to individuals and institutions. Individual investors can use the Investor Services division for retail brokerage, investment counseling, banking and trust services, and retirement plan services. Custodial, trading, banking and trust, and support services, as well as retirement business services, are provided by the Advisor Services sector to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers. Brokerage, mutual funds, exchange-traded funds (ETFs), advising solutions, banking, and trust are among the company’s product offerings.

Walter W. Bettinger II is the Company’s President, Chief Executive Officer, and Director. Since 2008, Mr. Bettinger has served as President and Chief Executive Officer of CSC. He is Chairman of CS&Co, as well as Chairman and trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust, all of which are CSC’s registered investment businesses and affiliates. From 2007 to 2008, Mr. Bettinger was President and Chief Operating Officer of CSC, and from 2005 to 2007, he was Executive Vice President and President of Schwab Investor Services of CSC and CS&Co. Mr. Bettinger began his career with Schwab in 1995.

Opinion: This is another purchase that leads us to believe that the selloff in market-related businesses is overdone. No doubt that there is some correlation between a bull market and Schwab’s stock price but the CEO is making a big bet that things are overdone here. These purchases of Schwab stock might signal not just a Schwab turnaround but a market turnaround as well.

 

 

Finviz Chart

Name: Creed Greg
Position: Director
Transaction Date: 2022-04-22 Shares Bought: 11,000 Average Price Paid: $44.03 Cost: $484,352.00
Company: Delta Air Lines Inc. (DAL)
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo in the United States and internationally. The company operates through two segments, Airline and Refinery. Its domestic network is centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit, and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK, and Seattle; and an international network centered on hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle, and Seoul-Incheon. The company sells its tickets through various distribution channels, including delta.com and the Fly Delta app, reservations, online travel agencies, traditional brick-and-mortar, and other agencies. It also provides aircraft maintenance, repair, and overhaul services; and vacation packages to third-party consumers, as well as aircraft charters, management, and programs. The company operates through a fleet of approximately 1,100 aircraft. Delta Air Lines, Inc. was founded in 1924 and is based in Atlanta, Georgia.

Greg Creed is a businessman who has led five companies and is currently the President of the Qut Foundation and the President of the Friends of Qut In America Foundation. He also serves on the boards of five additional firms and is a member of the American Society of Corporate Executives and The Business Council. Greg Creed has previously held the position of Director at Yum! Brands, Inc., Chairman & Chief Executive Officer of Yum! Brands Foundation, Inc., Chief Executive Officer-Division at Taco Bell Corp., Chief Marketing Officer of Yum! Restaurants International, Inc. (both Yum! Brands, Inc. subsidiaries), and Chairman & Chief Executive Officer of Yum! Brands Foundation, Inc.

Opinion: Its tough to make money in the airline business. Ask none other than Warren Buffett, who’s now struck out twice at it. We’ve got a larger position in SkyWest which did not take on a lot of debt from the Government’s plan to bail out the airlines in 2020 with the Pandemiic. They’ve paid back the loan anyway. I don’t have the confidence level in Delta that I do in SkyWest.

 

Finviz Chart

Name: Grant Hugh
Position: Director
Transaction Date: 2022-04-25 Shares Bought: 12,300 Average Price Paid: $40.75 Cost: $501,225.00
Company: Freeport-McMoRan Inc (FCX)
FCX stands for Freeport-McMoRan Inc., which is a mining company. The company operates through geographical assets that include copper, gold, and molybdenum deposits that are proven and probable, as well as a traded copper producer. Refined copper products, copper in concentrate, gold, molybdenum, oil, and others are among the company’s segments. The Morenci, Cerro Verde, and Grasberg copper mines, as well as the Rod & Refining activities and the United States (US) Oil and Gas Operations, are among the company’s segments. North American copper mines, South American copper mines, Indonesian copper mines, and Molybdenum mines are among the company’s five divisions. The Grasberg minerals district in Indonesia, copper and gold resources, and mining activities in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America, are all part of the company’s portfolio.

Mr. Hugh M. Grant is an Independent Director of Freeport-McMoRan, Inc., a Lead Independent Director of PPG Industries, Inc., a Chairman of Civic Progress, a Chairman & Chief Executive Officer of Monsanto Argentina SRL, a Member of the American Academy of Arts & Sciences, and a Member-Commissioners Board of the St. Louis Science Center. Invaio Sciences, Inc., Freeport-McMoRan, Inc., PPG Industries, Inc., Biotechnology Innovation Organization, CropLife International, The Donald Danforth Plant Science Center, and Washington University in St. Louis all have him on their boards of directors. Mr. Grant previously worked for Monsanto Co. as a Chairman and Chief Executive Officer and as a Co-President-Agricultural Sector. He was also a member of the United Way of Greater St. Louis board of directors.

Opinion: Copper has been on a tear and as inflation takes its toll on all aspects of the economy, we like having an investment in a core commodity like copper. As the world’s largest copper mining company, Freeport-McMoran is the best way for the average person to participate.  This is a small pullback in a bull run. I’d take advantage of it but don’t get carried away here. FCX is sitting on support

 

Finviz Chart

Name: Harry Sloan
Position: Director
Transaction Date: 2022-04-22 Shares Bought: 50,000 Average Price Paid: $12.72 Cost: $635,800.00
Company: Lions Gate Entertainment Corp. (LGF.B)
Lions Gate Entertainment Corporation, doing business as Lionsgate, is an American-Canadian entertainment company. It was formed by Frank Giustra on July 10, 1997, in Vancouver, British Columbia, Canada, and is currently headquartered in Santa Monica, California, United States. In addition to its flagship Lionsgate Films division, the company contains other divisions such as Lionsgate Television and Lionsgate Interactive. It owns a variety of subsidiaries such as Summit Entertainment, Debmar-Mercury, and Starz Inc.

Harry Evans Sloan is a media investor, entrepreneur, and studio executive, and Vice Chairman of the Board. Mr. Sloan served on the board of directors of Videocon from May 2016 to April 2018. Throughout his impressive entrepreneurial career, Mr. Sloan was responsible for the creation or sponsorship of three successful public companies in the media and entertainment industries: Lions Gate Entertainment Corp., an independent motion picture and television production company, New World Entertainment Ltd., an independent motion picture and television production company, and SBS Broadcasting.

Opinion: This is a perennial take-out candidate. With all the streaming channels, the demand for content has never been greater. Why it hasn’t happened already is a mystery and it’s one that I’ve lost interest in.

 

Finviz Chart

Name: Bennett Robert
Position: Director
Transaction Date: 2022-04-25 Shares Bought: 53,000 Average Price Paid: $18.88 Cost: $1,000,490.00
Company: Warner Brothers Discovery

Warner Bros. Discovery, Inc. is an American multinational mass media and entertainment conglomerate. The company was formed through the divestment of WarnerMedia by AT&T, and its merger with Discovery, Inc. on April 8, 2022.

The company’s properties are divided into seven business units, including the flagship Warner Bros. film and television studios, Home Box Office, Inc. (which includes HBO, Cinemax and Magnolia Network), CNN, U.S. Networks (which comprises linear television properties such as TBS, TCM, TNT, Cartoon Network, Adult Swim, Discovery Channel and its sister networks, the former Scripps Networks Interactive channels such as Food Network and HGTV, and a stake in the broadcast network The CW (alongside Paramount Global), Sports (which includes Discovery’s Eurosport networks and WarnerMedia’s Turner Sports division), Global Streaming & Interactive Entertainment (which includes the Discovery+ and HBO Max streaming services, and video game publisher Warner Bros. Interactive Entertainment), and International Networks. It is also the owner of comic book publisher DC Comics.

Robert R. Bennett is managing director of Hilltop Investments, a private investment company. Mr. Bennett previously served as president of Discovery Holding Company from 2005 to 2008, when it merged with Discovery. Mr. Bennett was one of the founding executives of Liberty Media, serving as its principal financial officer from its inception in 1991 until 1997 and as its president and chief executive officer from 1997 to 2005. Prior to his tenure at Liberty Media, Mr. Bennett worked with Tele-Communications, Inc. in a variety of financial positions and with The Bank of New York.

Opinion: This is a new spinoff from AT&T.  It didn’t take much of a crystal ball to see that AT&T’s efforts to become a media conglomerate were ill-founded. It didn’t help to spin off the company in the wake of Netflix’s disastrous quarter.

 


 

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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 within 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. SECForm4 is one of the smaller ones but I like supporting Frank. He is not arrogant. He’s helpful and has great prices. He also trades on his own data so I like people that eat what they kill.

“Typos Modus Operandi” if you can’t figure out what I meant
you shouldn’t be reading my emails anyway. In other words, the typos are free.                                                                                                                                                                                                                                                                                            n

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. It’s just one piece of the investor’s due diligence. The Insiders Fund blog informs you of the purchases that count.  As a rule, we only look at material amounts of money 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.  Do your own analysis. They can easily be wrong about, 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!

We like Fly on the Wall for keeping up with what events might be happening, analysts’ comments, and whatever else could be moving the stock.  Dow Jones news service is an essential tool but many services pick up their feed like they do Bloomberg. For quick financial analysis, it’s hard to beat Old School Value.

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. 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