Reuter’s headline news Friday that Chile is nationalizing the vast lithium deposits sent Albermarle and the rest of the lithium economy into a tailspin. More than half of the estimated global lithium resources are located in the salt flats of Bolivia, Chile, and Argentina, much of that in Bolivia. For the time being, lithium stocks are uninvestable. Think Casear Chavez and Chevron’s disastrous write-offs in Venezuela. It will be interesting to see if there is any insider buying in the world’s largest public producer, Albermarle. Perception usually trumps facts when it comes to stock market investing. The repercussions of this throw into doubt an already dubious proposition that automobiles riding on giant iPhone batteries will replace the combustion engine. But I digress:
Ironically there has been almost zero insider buying of interest during the last two weeks. The earnings blackout has been with us for some time, but it’s time for corporate America to show some conviction in the companies that pay them so well. Then again, how much stock could the CEO of Google even buy to keep it from looking like window dressing after Friday’s headlines of his $226 million annual salary?
Sundar Pichai, the CEO of Google and Google’s parent company, Alphabet, made nearly $226 million in 2022, according to a new filing from Alphabet. The majority of the pay came from stock holdings, valued at more than $218 million. The rest of the compensation came from a $2 million base salary and more than $5 million for a private security detail. Not sure I get the economics of spending more than twice your base pay on a security detail. Maybe it would be cheaper if he didn’t come to work. I doubt by the stock price one could tell any difference.
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Name: John Donovan
Position: Director
Transaction Date: 2023-04-19 Shares Bought: 506 Average Price Paid: $495.17 Cost: $250,556
Company: Lockheed Martin Corp (LMT)
Lockheed Martin Corporation is an international security and aerospace business specializing in the research, design, development, production, integration, and maintenance of high-technology systems, products, and services. In addition, the firm offers managerial, engineering, technical, scientific, logistical, system integration, and cybersecurity services. Defense, space, intelligence, homeland security, and information technology, especially cybersecurity, are the primary areas of concentration. The firm provides goods and services with military, civil, and commercial applications to domestic and foreign clients, with the primary customers being US government agencies. The organization operates in a complicated and ever-changing global security environment. The goal of 21st Century Security is to combine new and current systems across all domains with sophisticated, open-architecture networking and operational technologies, allowing forces to become more flexible, adaptable, and unexpected.
Donovan served as CEO of AT&T Communications, LLC, a wholly-owned subsidiary of AT&T Inc., from August 2017 until his resignation in October 2019. He was AT&T Inc.’s chief technology officer from April 2008 until January 2012. He was AT&T Technology and Operations’ chief strategy officer and group president from January 2012 until August 2017. Before joining AT&T, Donovan was the executive vice president of product, sales, marketing, and operations at VeriSign Inc. He was also the chairman and CEO of inCode Telecom Group Inc., where he helped cellular operators throughout the globe establish their strategy, and a partner at Deloitte Consulting, where he headed America’s telecom practice. Donovan is the President’s National Security Telecommunications Advisory Committee’s chair, a director of the worldwide cybersecurity business Palo Alto Networks, and the author of many books on advanced networking and organizational leadership.
Opinion: Lockheed Martin is portfolio insurance. Instead of costing exorbitant amounts of money like options against a market sell-off, LMT pays you. Its 20.87% 10 yr annualized return compares favorably to the S&P 500’s 12.41%. The largest defense contractor in the world has secular tailwinds as the world rethinks “Pax Americana” and arms up against an expansionary Russia and its coddling group of despot dictators. Throw in the inevitable China Tawain conflagration, and you might want to consider Lockheed as the “only” safe stock to own in a dangerous world.
Name: David III Daniel Daniel
Position: Director
Transaction Date: 2023-04-13 Shares Bought: 47,500 Average Price Paid: $14.42 Cost: $684,808.00
Company: Domo Inc. (DOMO)
Domo Business Cloud is a contemporary business intelligence software platform that allows procedures vitally reliant on business intelligence data to be completed on-the-fly, in as little as minutes or seconds at scale. Domo’s Business Cloud is meant to alter how enterprises are managed and allow clients to go fast, large, and bold, from marketing to operations, HR to finance, IT to product development, and supply chain to sales. Data throughout the organization is gathered, saved, processed, sorted, analyzed, displayed, and shared using Domo’s Business Cloud. Algorithms and machine learning may be used to data to generate warnings and encourage actions.
Daniel D. Daniel, the founder of Twenty Acre Capital LP, is on the board of Domo, Inc. Daniel has served on the board of directors since April 2019 at Domo, Inc. He was formerly a Director at BlackRock Advisors LLC, a Special Situations Analyst at UBS Securities LLC, and a Special Situations Analyst at Wall Street Access LLC. Daniel D. Daniel earned his undergraduate degree from the University of Utah and an MBA from the University of Pennsylvania’s Wharton School
Opinion: The curious case of Joshua James returning as CEO after a short sabbatical to the data visualization company he founded. James built a Utah-based company, Omniture, which Adobe acquired for $1.8 billion in 2019. This brought Adobe to Utah and was instrumental in an exodus of Silicon Valley tech moving to the mountains of Utah. Utah is a business-friendly state, one of the great outdoor and formerly affordable places to live. James founded Silicon Slopes, a wildly successful partnership between government and private business. Almost immediately, James, the serial entrepreneur, started Domo. It was a poster child for aspirational wealth, and the new company attracted a lot of investors. Domo soared in value. After all, he was the golden boy, and Domo had (has) a great product. Fast forward to 2023, and revenue growth at Domo has stalled. James is back at the helm. Simply put, can he find lightning in a bottle twice?
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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 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.
The bar is different from selling because the natural state of management is to be a seller. 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, are horrendously poor. Also planned sales that pop up out of nowhere are basically sales and are seeking cover under this corporate welfare loophole. I also generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and perhaps not the smart money on which we are trying to read the tea leaves. I say generally because some 10% shareholders are great investors. Think Warren Buffett, Icahn, and others
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.
A big callout to my assistant Ambreen who sets up this conversation by listing the notable buys that I’ve identified. She probs the 10k for a reasonable description of the business. I’ve found that to be the most accurate and succinct place to find out what a business actually does. The websites and marketing material are just that, poorly disguised marketing material for many. I should know that better than most if you at my past involvement in building the 1st websites for many Fortune 500 companies.
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.
This blog is solely for educational purposes and the author’s own amusement. Don’t rely on this blog. Think of the blog as part of my personal investment journal that I am willing to share with the DIY investor. We welcome your comments on our analysis, but please do your own research. Investing with The Insiders Fund is for qualified investors and by Prospectus only. Nothing herein should be construed otherwise. THE INSIDERS FUND prefers to invest in companies at or near prices that management has been willing to invest significant amounts of their own money in but we have no requirement to do so. We also invest in many companies in anticipation of future insider buying or with the expectation that there is none at all.
You can be an insider, too– by clicking here
Prosperous Trading,
[…] Energy Transfer certainly looks like it is coming home for investors. Oil producers and suppliers have been on a steady ramp for the last month after lagging most of the year. Ironically, lithium carbonate, the basic ingredient in EV batteries, is flirting with multi-year lows as the Inflation Reduction Act hands out $billions to build a domestic supply chain of lithium batteries. Recent headlines trumpet the Administration’s ban on drilling for oil in the Arctic, yet new supply is the panacea for high prices. Conoco looks like the sole U.S. driller to plunge the Arctic unknown, but the market doesn’t seem to give it much credit for such an advantage. Absent a carbon tax, I don’t see what holds back oil company stocks, as high underlying commodity prices make them more valuable. The laws of economics would predict that high gasoline prices will encourage more switching to EVs’. Buy more Albermarle? […]