We are deep in the blackout period when most companies prohibit insiders from trading in their stock prior to quarterly earnings. It’s been ugly out there for the bulls.

Finviz Chart

Name: Vincent P. DiFronzo
Position: EVP,-Air Force & Comb Commands
Transaction Date: 2024-04-12 Shares Bought: 795 Average Price Paid: $126.04 Cost: $100,202
Company: Science Applications International Corp (SAIC)

Science Applications International Corporation offers technical, engineering, and enterprise information technology (IT) services primarily in the United States. The company’s offerings include IT modernization; digital engineering; artificial intelligence; weapon systems support, which designs, builds, modifies, integrates, and sustains weapon systems; and end-to-end services, such as design, development, integration, deployment, management, and operations, sustainment, and security of its customers’ IT infrastructure, as well as training and simulation; and ground vehicle support, which integrates, modifies, upgrades, and sustains ground vehicles. The corporation was previously known as SAIC Gemini, Inc., but changed its name to Science Applications International Corporation in September 2013. Science Applications International Corporation was created in 1969 and has its headquarters in Reston, Virginia.

Vincent P. DiFronzo is the senior vice president of operations for SAIC’s US Air Force, Combatant Commands, and Department of Defence clients. He oversees thousands of people and several initiatives in information technology, policy support, research and development, engineering, systems development, and aircraft sustainment. DiFronzo joined SAIC in 2015 as a vice president overseeing Air Force programs. He has over 12 years of defense contracting experience and served in the Air Force for 27 years, retiring as a Colonel in 2007. During his time in the Air Force, DiFronzo served two Pentagon tours: first as an Air Staff requirements action officer, supporting the special assistant to the chief of staff of the Air Force for the Commission on Roles and Missions, and then as the Deputy Chief of Staff’s executive officer. He earned an MBA from Golden Gate University, the National War College, and the Air Force Academy.

Opinion: The business of war is on an upswing but the stocks don’t work well, yet

Finviz Chart

Name: Andrew R Heyer
Position: Director
Transaction Date: 2024-04-16 Shares Bought: 22,000 Average Price Paid: $19.72 Cost: $433,746
Company: Lovesac Co (LOVE)
Lovesac Co is a technology-driven company that designs, manufactures, and distributes one-of-a-kind, high-quality furniture using their own “Designed for Life” approach, which results in products built to last a lifetime and develop with the customers’ lifestyles. The company’s current product line consists of modular couches called Sactionals, luxury foam beanbag chairs named Sacs, and related home decor items. Innovation is key to their design philosophy, and all of their main products are covered by a broad portfolio of utility patents. The company markets and sells its products through an omnichannel platform that comprises direct-to-consumer touch points such as its showrooms, which feature mobile concierge and kiosks, as well as online at www.lovesac.com. They feel that the e-commerce-centric approach, combined with their capacity to deliver large upholstered products by rapid couriers, is unique in the furniture market.

Mr. Heyer is the CEO and Managing Director of Mistral Equity Partners. Before creating Mistral, Mr. Heyer was the creating Managing Partner of Trimaran Capital Partners. Mr. Heyer was previously a Vice Chairman of CIBC World Markets Corp. and Co-Head of the CIBC Argosy Merchant Banking Funds. Before joining CIBC World Markets Corp. in 1995, Mr. Heyer was the founder and managing director of The Argosy Group L.P. Mr. Heyer was a Managing Director at Drexel Burnham Lambert Incorporated before joining Argosy, and he had previously worked at Shearson/American Express. Mr. Heyer now serves on the boards of OnSpaWorld Holdings Ltd., Arko Corp., Worldwise, and Lovesac. Mr. Heyer is also the President and Director of Haymaker Acquisition Corp. III, having previously held these positions at Haymaker Acquisition Corp. I and II. He also works as a Director for Tastemaker Acquisition Corp. Mr. Heyer graduated magna cum laude from the University of Pennsylvania’s Wharton School with a B.Sc. and M.B.A.

Opinion: Good to lie on, the definition of a “comfort trap”.

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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 with any stock market experience 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 of 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, we analyze unusual patterns with selling, 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 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.

This blog is solely for educational purposes and the author’s own amusement.  Think of the blog as part of my personal investment journal that I am willing to share with the DIY investor.  There are also many parts that I am not willing to share if I think it could influence trading action or be detrimental to the Fund’s partners. We could be long, short, or have no position at all in any of the stocks mentioned and express no written or implied obligation to disclose any of that.

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