Curious how well insiders are doing with their buys? Scroll through the blog posts and see for yourself
The market declined every day last week, but on Wednesday last week, Federal Reserve Chairman Powell opened the gates of hell for equity investors when he pronounced that not only would the FED hike rates into the 4%-5% or higher ranges but they were determined to keep them there for the foreseeable future until inflation was clearly on a path to their 2% per annum target.`
I often say that making money in the market is all about people with conviction taking money from those that lack it. At the moment conviction is in short supply, and what’s there is firmly is in the bear camp, long dollar, and short equities. We are deep into the quarterly earnings blackout, and most insiders are restricted from buying their company’s stock for three more weeks, at least until the middle of October. All bear markets in the last 20 years have ended with a crescendo of insider buying. As you can see from the cadence of these reports, we are nowhere near such a cathartic moment. In fact, we are sitting on support which I expect to be broken next week. Buy that doesn’t mean you shouldn’t be shopping for bargains. Insiders are doing just that.
Name: Jeffrey Keenan
Transaction Date: 2022-09-12 Shares Bought: 10,600 Average Price Paid: $25.77 Cost: $273,162.00
Transaction Date: 2022-09-13 Shares Bought: 36,698 Average Price Paid: $24.44 Cost: $897,007.00
Company: Mativ Holdings Inc.(MATV)
Mativ Holdings, Inc. is a manufacturer of performance materials. The business is divided into two segments: Engineered Papers and Advanced Materials & Structures (AMS) (EP). The AMS division produces rolling goods made of resin, including nets, films, melt-blown materials, bonding products, adhesive components, adhesives, and other coating solutions, as well as conversion services. It caters to the end-markets for healthcare, building, industrial, transportation, and filtration. For the tobacco business, the EP section makes a variety of cigarette papers and reconstituted tobacco products. Additionally, it makes non-tobacco papers for a range of uses, including industrial commodity paper grades and energy storage. The business markets its goods in the Americas, Europe, the former Commonwealth of Independent States, Asia Pacific, and globally. Schweitzer-Mauduit International, Inc. was the company’s previous name before it changed to Mativ Holdings, Inc. in July 2022. Alpharetta, Georgia serves as the corporate headquarters for Mativ Holdings, Inc., which was founded in 1995.
Entrepreneur Jeffrey J. Keenan started IESI Corp. and has held leadership positions in 6 different businesses. He now holds the positions of Executive Chairman of ACV Enviro Holding Corp. and Chief Executive Officer, CFO, and Secretary at Synergy Environmental Corp. Mativ Holdings, Inc.’s board of directors also includes Mr. Keenan. Prior to joining AEA Investors LP, he worked as a principal at Acadia Partners LP, president, and chief compliance officer at Roark Capital Group, Inc., chairman at IESI Corp., president of The United Co., principal at Lehman Brothers, Inc., and general partner & managing director at AEA Investors LP.
The University of Chicago awarded Mr. Keenan a graduate degree, an MBA, and an undergraduate degree.
Opinion: On July 6, 2022, SWM International, Inc. (“SWM”) and Neenah, Inc. (“Neenah”) completed a merger of equals (“the merger”) in which each SWM share was converted into one share of Mativ common stock and each share of Neenah was converted into 1.358 shares of Mativ common stock. There is probably some confusion about what the company is, and that could be the genesis of Keenan’s purchase. The combined company just released 2nd quarter earnings and is paying a $1.60 per share annual dividend. That equates to a 6.67% yield. I have to admit I’m surprised by the size of the dividend considering this is a pretty levered business approximately 4.1x. They say that de-levering is a key priority, and expect to finish the year at or below 3.75x and to be below 3.5x in 2023.
The CEO was quoted in the Q2 press release, “We are very confident that our cost synergy plan will result in at least $65 million of savings, with a year-end 2022 exit run-rate of approximately $20 million. Integration is off to a fast start, our teams are collaborating, and we are laser-focused on a smooth operational transition while also tackling high-value projects to accelerate margin expansion.”
Name: Ondrej Vlcek
Transaction Date: 2022-09-15 Shares Bought: 456,475 Average Price Paid: $21.91 Cost: $9,999,998.00
Company: NortonLifeLock Inc.(NLOK)
Consumers in the United States, Canada, Latin America, Europe, the Middle East, Africa, the Asia Pacific, and Japan can purchase cyber security products from NortonLifeLock Inc. It offers Norton 360, an integrated platform that offers comprehensive cyber safety coverage and a subscription service that protects PCs, Macs, and mobile devices from malware, viruses, adware, ransomware, and other online threats on a variety of platforms; as well as Norton and LifeLock identity theft protection solutions that provide monitoring, alerts, and restoration services to its clients. Additionally, the business offers the Norton Secure VPN solution, which improves security and online privacy by supplying an encrypted data tunnel, and Privacy Monitor Assistant, an on-demand, white glove service where representatives assist users in removing personal information from online data brokers. Home Title Protect, a tool that identifies fraud and alerts users, and Avira Security, a line of cybersecurity and privacy products geared toward end users. It offers two products: a Dark Web Monitoring product that searches the Dark Web for the personal information of its Norton 360 members; and a Social Media Monitoring solution that keeps customers’ social media accounts safer by keeping an eye out for account takeovers, risky activity, and inappropriate content.
Previously, Ondrej Vlcek oversaw the creation of Avast’s artificial intelligence-based cloud security network while simultaneously serving as president of the company’s largest division, Avast Consumer. In May 2018, Mr. Vlcek played a significant role in the company’s listing on the London Stock Exchange. Prior to this, he served as both the Chief Technology Officer and Executive Vice-President & General Manager, Consumer. In this capacity, he oversaw Avast’s transition from a conventional PC antivirus vendor to the top supplier of a comprehensive portfolio of consumer protection, privacy, and performance solutions. Prior to that, Mr. Vlcek served as the team’s main developer and oversaw the creation of one of the earliest antivirus systems ever made for Windows. Mr. Vlcek is a graduate of the Czech Technical University in Prague with a degree in mathematics. He has given keynote addresses at a number of prestigious events, including RSA, Web Summit, Black Hat, and SXSW. He is a well-known industry speaker.
Opinion: Here we go again. More wealth destruction is likely through none too clever financial engineering. This is a massive insider buy, and the context behind this is the key to understanding the transaction. Vicek almost assuredly got a massive payday as NLOCK paid billions in stock and cash for AVAST where he was the CEO. $10 million is most likely a relatively small purchase considering his likely payday. Norton Lifelock has a sleazy DNA, and I don’t know if this latest machination does anything to change it. I digress:
Symantec bought LifeLock for $24 per share in cash in November 2016.
Wind the clock forward to 2019. the antivirus company formerly known as Symantec renames itself NortonLifeLock.Although Symantec has been selling antivirus protection through its Norton security software for decades, the market for the product has been drying up. Demand for PCs has largely been stagnant in recent years, and free antivirus software, including Windows Defender, has emerged as a viable alternative to paid security products, according(Opens in a new window) to the research firm Forrester.
The company completed its sale of the Symantec brand and enterprise cybersecurity business to Broadcom as part of a $10.7 billion deal and focused on selling on security products for consumers and small businesses with the help of the LifeLock brand, which it acquired in 2016. In 2015, the FTC obtained a $100 million monetary penalty against LifeLock with $68 million held for class-action refunds to customers in relation to false advertising and failed service delivery allegations.
The LifeLock brand, on the other hand, has been trying to capitalize on the growing threat of hackers abusing the personal information leaked from data breaches
NortonLifeLock (NLOK) announced it has completed its previously announced acquisition of Avast (AVASF). With the completion of the transaction, trading in Avast shares was suspended at 7:30 a.m. BST on September 12, 2022, and the Avast shares will be delisted from the London Stock Exchange effective as of September 13, 2022, at 8:00 a.m. BST. The combined company will operate as NortonLifeLock and discuss its shared financials and metrics during the fiscal year 2023 second quarter earnings release call. As it starts merging its operations, the combined company will soon announce a new name that reflects the forward-thinking vision and scale of its comprehensive Cyber Safety platform and trust-based solutions for consumers around the world.
Name: Matthew J Gould
Transaction Date: 2022-09-16 Shares Bought: 14,377 Average Price Paid: $21.81 Cost: $313,563.00
Transaction Date: 2022-09-22 Shares Bought: 3,205 Average Price Paid: $21.54 Cost: $69,027.00
Company: BRT Apartments Corp.(BRT)
Name: Jeffrey Gould
Transaction Date: 2022-09-16 Shares Bought: 14,735 Average Price Paid: $21.74 Cost: $320,386.00
Transaction Date: 2022-09-22 Shares Bought: 3,205 Average Price Paid: $21.54 Cost: $69,027.00
Company: BRT Apartments Corp.(BRT)
The company’s main areas of interest include multi-family property ownership, management, and development. All of the company’s assets are made up of multifamily real estate properties, which are typically leased to tenants for a period of one year.
Businessman Matthew J. Gould has served as the CEO of 5 separate organizations. He currently holds the positions of Chairman of Gould Investors LP, Director and Senior Vice President of Majestic Property Management Corp., Chairman and Chief Executive Officer of Georgetown Partners, Inc., Chief Executive Officer of Rainbow Realty Group LLC, and Chief Executive Officer of Rainbow MJ Advisors LLC. Majestic Property Management Corp. is a subsidiary of Gould Investors LP. In addition, Mr. Gould serves as chairman of One Liberty Properties, Inc., director and senior vice president of BRT Apartments Corp., and senior vice president of REIT Management Corp. He is also on the boards of Sportsvite LLC and Halsa Holdings LLC. Both the University of Michigan and Yeshiva University awarded Mr. Gould undergraduate and graduate degrees.
Jeffrey A. Gould now holds the positions of Director and Senior Vice President of One Liberty Properties, Inc. and President, Chief Executive Officer, and Director at BRT Apartments Corp. In addition, Mr. Gould serves as managing general partner at Gould Investors LP, principal at UJA-Federation of New York, member of Young Presidents’ Organization, Inc., World Presidents’ Organization, and Chief Executives Organization, Inc.; principal at Federation Employment & Guidance Service, Inc.; director and senior vice president at Georgetown Partners, Inc.; and member-New York Finance Committee at Real Estate Board of New York, Inc.
Opinion: The rapid rise in interest rates engineered by the FED will have a serious impact on the valuations of multifamily properties. The hurdle rate at which multifamily properties are attractive investments just got higher. It will slow down overbuilding and keep tenants in rentals longer by making homeownership far more expensive. 4.7% is a decent enough dividend yield with rents going up, and a 3.7% 10yr. Treasury bond.
Name: Liam Stewart
Position: Chief Operating Officer
Transaction Date: 2022-09-20 Shares Bought: 3,300 Average Price Paid: $15.26 Cost: $50,348.00
Company: DigitalBridge Group Inc. (DBRG)
Name: Marc C Ganzi
Transaction Date: 2022-09-20 Shares Bought: 32,000 Average Price Paid: $15.22 Cost: $487,040.00
Company: DigitalBridge Group Inc. (DBRG)
An infrastructure investment company is called DigitalBridge (NYSE: DBRG). Cell towers, data centers, fiber, tiny cells, edge infrastructure, digital infrastructure, and real estate are just a few of the industries it invests in and runs. With its headquarters in Boca Raton, Florida, and offices also in Los Angeles, California, New York, New York, Boston, Massachusetts, Denver, Colorado, London, United Kingdom, Senningerberg, Luxembourg, and Singapore, DigitalBridge Group, Inc. was established in 2009.
Mr. Liam Stewart holds the positions of Chief Financial Officer at Macquarie Infrastructure Partners, Inc. and Chief Operating Officer at DigitalBridge Group, Inc. He serves on the boards of directors for White Sands Bidco, Inc. and Boingo Wireless, Inc. Previously, Mr. Stewart worked for Macquarie Infrastructure Corp. as its Chief Financial Officer, Global Tower LLC as it’s Senior Vice President-Treasury & Planning, Accenture LLC as its Strategy Consultant, American Consolidated Media, Inc. as its President, CEO, and Non-Executive Director, Fairfax Media Ltd. as its Principal, and Macquarie Group Ltd. as its Portfolio Manager. The Gas Co. LLC, Atlantic Aviation Corp., Intersect Power LLC, and IMTT Holdings, Inc., and he also sat on the boards of these companies. He graduated from The University of New South Wales with a graduate degree, The University of New South Wales with an undergraduate degree, and Kellogg School of Management with an MBA.
Marc C. Ganzi has more than 25 years of experience as an investor and operator in the digital infrastructure market. He now serves as CEO of DigitalBridge. Mr. Ganzi oversaw the growth of DigitalBridge into a top platform for investing in real estate and digital infrastructure. Before its merger with the current publicly traded company, DigitalBridge Group, Inc., in July 2019, Mr. Ganzi founded Digital Bridge Holdings in 2013. He served as its CEO while growing the company into a market-leading global manager of digital infrastructure assets with more than $20 billion in AUM. The Wharton School of Business awarded Mr. Ganzi a Bachelor of Science in 1993. He served as chairman of the Wireless Infrastructure Association’s board from 2009 to 2011 while also being a board member from 2008 to 2017. He participates in both the Federal Communications Commission’s Broadband Deployment Advisory Committee and the Young Presidents’ Organization.
Opinion: I see nothing attractive here.
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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.
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.
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 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, 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.
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