Esteemed Wharton professor Jeremy Siegel says we are in a ‘Goldilocks economy’ and the Fed doesn’t need to raise interest rates anymore. You hear this term mentioned when almost all the risks and scary things that you can anticipate in the market are out there in full view, and nothing scares the crap out of you.  Top of my news feed this morning is the idea that we have a Goldilocks market.  I even wrote about it myself in The Insiders Fund’s most recent partner letter.

The Goldilocks market is back.  So what is Goldilocks in financial terms?  According to Investopedia, A Goldilocks economy describes an ideal state for an economy whereby the economy is not expanding or contracting by too much. A Goldilocks economy has steady economic growth, preventing a recession, but not so much growth that inflation rises by too much.

Will earnings confirm a Goldilocks economy

ECB Seen Headed for Goldilocks Moment With Rate Path …

Goldilocks Economy Is a Fairy Tale Too Good to Be True › Markets › Streetwise

Stock market’s ‘goldilocks moment’ can last as inflation cools … › video › 2023/07/13 › if-prices-stay-stab…
Anastasia Amoroso, iCapital chief investment strategist, joins ‘The Exchange’ to talk the stock market, the impact of inflation, and more.
CNBC · 1 day ago

I’m always on the lookout for a black swan.  They often land disguised as something else.  For example, the Internet engineered a Dot.Com bubble and a nuclear tech winter, rapidly appreciating housing prices due to liar loans and mortgage syndication with credit default swaps caused the excesses that led to the Great Recession of 2008.  My high conviction guess is that generative AI is the bubble we’ve been waiting for.  Bitcoin never quite got the entire world suckered in, but generative large language models AI is a sure thing.  The hype from this truly breakthrough technology will roll over markets like a tsunami drowning the investor community. Your guess as to when the carnage begins is as good as mine, which means I have no idea. I will say this; insiders are largely not buying the hype. I only found two things to even write about this week, a historic low in enthusiasm. Lots of sellers, though.  It’s different this time, right?

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Name: Lecil E Cole
Position: Chief Executive Officer
Transaction Date: 2023-07-12 Shares Bought: 75,000 Average Price Paid: $30.34 Cost: $2,275,500
Company: Calavo Growers Inc (CVGW)

Calavo Growers, Inc. is a world leader in the avocado industry and a value-added fresh food provider. Because the Company knows how to market and distribute avocados, avocado goods that have already been made, and other perishable foods, they can send a wide range of fresh and ready-to-eat foods to grocery stores, food service, club stores, mass merchandisers, food distributors, and wholesalers all over the world. The Company buys avocados from California, Mexico, and other places where they are grown worldwide. Through the various operating facilities, they (i) sort, pack, or ripen avocados, tomatoes, or Hawaiian-grown papayas, (ii) process and package guacamole and salsa, and (iii) create process, and package a portfolio of healthy fresh foods such as fresh-cut fruit and vegetables, and prepared foods such as sandwiches, salads, parfaits, and ready-to-eat snack items. The Company sells the goods in the United States and worldwide.

Lecil E. Cole, often known as Lee, has been the Chief Executive Officer and President of Calavo Growers, Inc. since February 1999. Lee Cole will return to Calavo as President and CEO in March 2023. Lee held many positions at Calavo before his current post, including President and Chief Executive Officer from 1999 to 2020, Director for 39 years, and Chairman of the Board for 28 years. He was crucial in acquiring Renaissance Food Group, known as Calavo’s Prepared. He introduced Calavo to the public market and grew it into one of the world’s largest avocado businesses. Furthermore, he brought Calavo to public attention, making it one of the world’s largest avocado businesses.

Opinion: Is the market for avocados that bad, or did the former CEO, Brian W. Kocher run the business into the ground?  The board must have thought the latter as  Cole gets called back  to the helm. 

Finviz Chart

Name: Dustin A. Moskovitz
Position: President, CEO, & Chair/10% Owner
Transaction Date: 2023-07-06 Shares Bought: 160,000 Average Price Paid: $21.34 Cost: $3,414,400
Company: Asana Inc. (ASAN)

Asana is a work management tool that assists organizations in orchestrating work ranging from everyday chores to cross-functional strategic projects. Asana is used by over 139,000 paying clients to manage anything from product launches to marketing campaigns to company-wide goal setting. The platform structures unstructured work, providing clarity, transparency, and accountability to everyone in an organization—individuals, team leaders, and executives—so they know who is doing what and by when. The Asana was founded after seeing firsthand the rising issue of work around work. Instead of working on projects that produced results, they spent their time in status meetings and extensive email threads attempting to determine who was in charge of what. The company mission is to help humanity thrive by enabling the world’s teams to work together effortlessly.

Dustin Moskovitz is the co-founder and CEO of Asana. Dustin is the CEO of Asana and is committed to delivering a product that enables teams all around the globe to interact seamlessly, as well as driving the company’s award-winning culture. Dustin co-founded Facebook and served as the company’s first Chief Technology Officer and VP of Engineering before launching Asana. Dustin studied economics at Harvard University before joining Facebook full-time in 2004.

Opinion: I can’t say anything more than I’ve said multiple times.  Any company growing that can maintain the annual recurring revenue growth rate with triple net retention ratios will eventually be a good buy.

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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 probes 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,

Harvey Sax
Insomniac Hedge Fund Guy