The quarter end is normally a dead time for insider buying.  When July 4th falls in the middle of the week, it’s especially boring. There is one thing that stood out on the insider’s front. It’s a story that Reuters broke last Thursday. It was reported that Cronos (CRON)had received numerous buyout offers.  The $2 stock spiked on this news but couldn’t even hold any gains and closed Thursday at the same price or even lower than before the news broke. I find this curious.

Reuters is credible. This is not some Reddit post or a firehose of idiots on Twitter.  I first blogged about Cronos when it caught my attention when a director, Marc Adler, started buying shares in his hedge fund in November of 2022. He has purchased $4.8 million worth of CRON, mostly at much higher prices. His last purchase was at the end of May this year.

If you recall, Cronos was the company Altria invested a ton of money into, $1.8 billion -when pot stocks were not going to pot.  Altria’s investment represents an approximate 45% economic and voting interest in Cronos Group with a warrant to acquire additional ownership at a price of CAD $19.00 per share, exercisable over the next four years.   The rumor was that Curaleaf, amongst others, was interested.  Well, I would not be surprised, as many people would be interested in buying Cronos for less than $2 per share as the company has no debt and is selling for below cash on its books. My math says that they have $2.20 per share in cash.

I don’t understand how Curaleaf could come up with the cash, but who knows, maybe Altria will take stock.  Their market cap, $3.2 Billion, is many times the pathetic valuation of CRON.  As always, do your own math and research.  According to Crono’s website, they had at the end of Q1 $836.42 Million in cash and cash equivalents, zero long-term debt, and 380.8 million shares outstanding.  My math says that’s about $2.20 per share in cash. Go figure.  It seems that maybe the Marlboro man has finally come to his senses and wants to break up with Mary Jane.

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Finviz Chart

Name: Jane T Elfers
Position: President and CEO
Transaction Date: 2023-07-05 Shares Bought: 43,000 Average Price Paid: $23.70 Cost: $1,019,100
Company: Childrens Place Inc. (PLCE)

The Children’s Place, Inc. is a North American children’s specialty clothing retailer. It is divided into two divisions: The Children’s Place U.S. and The Children’s Place International. The firm provides clothing, footwear, accessories, and other goods for children and tweens, and it creates, manufactures, and sells merchandise under the proprietary brand names The Children’s Place, Place, Baby Place, Gymboree, Sugar & Jade, and PJ Place. In June 2014, the firm changed its name from The Children’s Place Retail Stores, Inc. to The Children’s Place, Inc. The Children’s Place, Inc. was established in 1969 and is based in Secaucus, New Jersey.

Jane Elfers became The Children’s Place’s President and Chief Executive Officer in January 2010. Jane has delivered several years of industry-leading shareholder returns by attracting best-in-class talent across the company, maintaining a relentless focus on product, overhauling the company’s systems, expanding into multiple international markets, implementing a digital and brick-and-mortar wholesale strategy, and developing a multi-pronged strategic digital transformation of The Children’s Place brand. Jane is a turnaround specialist with 34 years of retail experience. She was formerly President and CEO of Lord & Taylor, where she rebuilt the failing brand and saved it from extinction. Jane started her retail career at Macy’s and is a Bucknell University alumna, having obtained a Bachelor of Science in Business Administration and presently serving on their Board of Trustees.

Opinion: Retail hasn’t been a good place to be this year. Well, for that matter, not much but tech and semiconductors have worked, but if you want to be in the rag business, children’s clothes are where it’s at.  They at least outgrow them.

Finviz Chart

Name: Dustin A. Moskovitz
Position: President, CEO, & Chair/10% Owner
Transaction Date: 2023-06-28 Shares Bought: 160,000 Average Price Paid: $22.57 Cost: $3,610,400
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 will never understand Moskovitz’s logic, but I have to say, as time goes on,  if they can keep up 45% revenue growth rates and 115% net retention ratios, it will catch up to any overvalued cloud play.


Finviz Chart

Name: David III Daniel Daniel
Position: Director
Transaction Date: 2023-07-07 Shares Bought: 26,400 Average Price Paid: $13.54 Cost: $357,580
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: DOMO can work if they really have a large language model AI prompt-based UI that can skate across all the database APIs they have connections for. If not, Microsoft Power BI might eat their lunch. I’ve got a request into Josh James- how about a demo?

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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.

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Prosperous Trading,

Harvey Sax
Insomniac Hedge Fund Guy