Curious about how well insiders are doing with their buys? Scroll through the blog posts and see for yourself

It’s been over nine months since the bear market began.  That is about the average time most bear markets end, but there is nothing average about this bear market.  There are just too many unsettling things for the investor’s animal spirits to soar.

  1.  Years of interest rates held at artificially low levels near zero and the Fed on an unpredictable and reckless path of rapid interest rates hikes. The dividend yield of the S&P 500 is 1.79% versus Friday’s 4% Treasury bond and nearly 4.5% Two-year bill.
  2. A surrogate war between the U.S., Nato, and Russia waged by the noble and brave Ukrainian people.
  3. Growing conflict with China and the West and the desire to onshore or nearshore supply chains that took decades to build
  4. Global warming and the naive pursuit and half-hearted pursuits of alternative “green energy” without the necessary transition planning.  There is no real path toward net zero carbon short of taking a return trip to the Stone Age. A miscalculation in the Russia-Ukrainian conflict could just do that with a nuclear Armageddon.
  5. A completely toxic political discourse, with no apparent path forward. For example, an obvious solution to slowing down the economy and at the same time helping the insane deficit would be to responsibly raise taxes. Instead, the Fed with no help from fiscal policy has to blunt growth with the only tool at its disposal, wrecking the stock market and retirement plans for many, eventually destroying jobs and making homeownership unaffordable for many.

But you don’t read this report to hear my world opinions, but we’re in such a pickle now that ignoring the macro is not possible. I will repeat what I have been saying for weeks now.  Stocks are nowhere near the bottom with the Fed’s boot on the throat of investors. We are now deep into the quarterly earnings blackout, and most insiders are restricted from buying their company’s stock for one or 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 and the lack of notable buying, we are nowhere near such a cathartic moment. 

 

Finviz Chart

Name: Thomas Meth
Position: President
Transaction Date: 2022-10-12 Shares Bought: 5,000 Average Price Paid: $50.84 Cost: $254,200.00
Company: Enviva Inc. (EVA)

Name: John K. Keppler
Position: CEO, Chairman
Transaction Date: 2022-10-12 Shares Bought: 4,943 Average Price Paid: $50.65 Cost: $250,363.00
Company: Enviva Inc. (EVA)

Name: William H Jr Schmidt
Position: VP
Transaction Date: 2022-10-12 Shares Bought: 5,023 Average Price Paid: $50.18 Cost: $252,054.00
Company: Enviva Inc. (EVA)
Enviva is a global energy company that focuses on wood bioenergy that is environmentally beneficial. They’re the largest producer of sustainable wood pellets in the world, a renewable alternative to coal that’s part of an all-in renewables plan to reduce carbon emissions, reduce reliance on fossil fuels, and combat climate change. Enviva employs over 1,000 people worldwide, owns and operates nine wood pellet manufacturing plants strategically located throughout the Southeast, and ships our wood pellets to customers all over the world from five deep sea export terminals. Our facilities are strategically located in areas with a well-managed and growing forest inventory, a strong infrastructure, and knowledgeable local employees. In the United States, the United Kingdom, Germany, and Japan, we have offices.

Enviva’s president and co-founder is Mr. Meth. He is in charge of all corporate operations, from the forest floor to the discharge of the customer after operations and logistics. Mr. Meth oversees the sustainability, fiber procurement, sales, and customer relations departments of Enviva. In addition, he is in charge of managing global public affairs efforts as well as larger plant and port operations. Mr. Meth has an M.B.A. from The Darden Graduate School of Business Administration at The University of Virginia and a Bachelor of Commerce from the Vienna University of Economics and Business Administration in Austria.

Entrepreneur and businessman John K. Keppler created Intrinergy LLC, Enviva LP, and Enviva Holdings LP. He has also served as the CEO of 5 different organizations. Mr. Keppler is now the Chairman, President, and Chief Executive Officer of Enviva Partners LP, Enviva LP, Chairman & Chief Executive Officer of Enviva Holdings LP, and Chairman & Chief Executive Officer of Enviva Partners GP LLC (which are all subsidiaries of Enviva Partners LP). The Sustainable Biomass Program Ltd. board of directors also includes Mr. Keppler. Previously, Mr. Keppler held the positions of President and CEO of Intrinergy LLC and Director of Corporate Strategy at America Online, Inc. John K. Keppler graduated from the University of California, Berkeley with a bachelor’s degree and the University of Virginia’s Darden School of Business with an MBA.

Mr. Schmidt oversees the development and construction teams responsible for extending Enviva Inc.’s operational reach in his roles as Executive Vice President, Chief Development Officer, and General Counsel. Additionally, he is in charge of all legal issues connected to the business’s global operations. Bill began working for Enviva in 2013, and he played key roles in the company’s initial public offering in 2015, corporate conversion and simplification transaction in 2021, as well as all of the organic and inorganic growth initiatives, such as acquisitions, joint ventures, and greenfield development projects. Bill has worked on several fruitful mergers and acquisitions, joint ventures, bank and capital market financings, and a wide range of business transactions covering the energy sector during the course of his career.

Opinion: Several insiders stepped up last week expressing their disagreement with a recent short seller report targeting Enviva. They did this in the only credible way. Putting their money where their mouth is.  I didn’t include Jeffrey Ubben’s large purchase as he is a billionaire and the money he is investing is not exclusively his.  Ubben is a hedge fund manager that I have a lot of respect for, but candidly I just don’t get the raison d’etre for this business.

Wood pellets are sustainable, I get that. Trees grow but using them as a renewable energy source seems stupid when the sun shines bright, and the wind blows, and the tides go in and out. I didn’t make the effort to analyze the report because I’m not a fan of this approach.

 

Finviz Chart

Name: Les Lehner
Position: SVP Chief Procurement Ofc
Transaction Date: 2022-10-12 Shares Bought: 12,154 Average Price Paid: $32.81 Cost: $398,741.00
Company: Dave & Buster’s Entertainment Inc. (PLAY)
Dave & Buster’s Entertainment, Inc. owns and operates entertainment and dining venues for adults and families in North America. Its venues offer a menu of entrées and appetizers, as well as a selection of non-alcoholic and alcoholic beverages and an assortment of entertainment attractions centered on playing games and watching live sports and other televised events. The company operates its venues under Dave & Buster’s name. January 31, 2021, it owned and operated 140 stores in 40 states, Puerto Rico, and one Canadian Province. The company was founded in 1982 and is headquartered in Dallas, Texas. At Dave & Buster’s, you can play hundreds of the hottest new arcade games in our Million Dollar Midway and win tickets for epic prizes. You want to work here. Try their mouth-watering, chef-crafted creations in their American restaurant. From wings to steaks, they’ve got whatever suits your appetite.

Les Lehner is employed at Dave & Buster’s Entertainment, Inc., a 1982-founded hospitality firm, as a Senior Vice President, Chief Procurement Officer, and Head of Main Event Development. Their management level is C-Level, and they are a member of the Finance team within the Finance Department. Les earned his degree from the University of North Texas in 2000, and he now resides in Coppell, Texas, in the United States.

Opinion: This place gives me a headache within minutes of entering. I can’t imagine how this will work when the people visiting Dave and Buster’s are getting whacked by the double whammy’s, inflation, and higher interest rates.

 

Finviz Chart

Name: Jeffrey Gould
Position: CEO
Transaction Date: 2022-10-07 Shares Bought: 15,163 Average Price Paid: $19.09 Cost: $289,490.00
Company: BRT Apartments Corp.(BRT)

Name: Matthew J Gould
Position: VP
Transaction Date: 2022-10-10 Shares Bought: 12,880 Average Price Paid: $19.04 Cost: $245,228.00
Company: BRT Apartments Corp.(BRT)
Multi-family real estate is owned, managed, and developed by BRT, a real estate investment trust. A real estate investment trust firm is BRT Apartments Corp. The company’s main areas of interest include multi-family property ownership, management, and development. In addition, BRT owns and manages further real estate holdings. 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.

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.

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.

Opinion: This makes complete sense to me, and I’d buy it. BRT pays over 6%, and the Fed is making us a nation of renters. It will be harder to buy a house and more expensive to build multifamily properties. BRT and other multifamily REITs are in a good spot.

 


 

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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.

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