Home Blog Page 14
Bill Stiritz may not have the name recognition of Jeff Bezos, Elon Musk or Warren Buffett, but the 84-year-old Non-Executive Chairman of Post Holdings, Inc. may be one of the greatest CEOs of the last half century. An investment of $100 made in Ralston Purina in 1981 when Stiritz was named CEO, would have would have been worth $5,700 by 2000 -- a compound annual return of 20%.
Home Depot co-founder Ken Langone, 83, is famously frugal. In an interview with CNBC last year the multi-billionaire told of challenging the cable company’s $200 bill for his Manhattan apartment’s service. “The point I'm making is it's not that I'm cheap, it's just that I want to make sure I don't squander money," Langone says.
On December 27, 2018, Cannell Capital LLC — a hedge fund based in Alta, Wyoming – disclosed sending three separate letters to three company managements, notifying them of Cannell’s activist intentions. Buying the stocks targeted by Cannell on that date would have produced an average gain of 32.40% over the 25 trading days since.
In 1951, Denver resident Ida Goldstein purchased the formula for Scott’s Liquid Gold for $350 as a business opportunity for her three young adult sons. The guys began mixing and bottling the amber-colored wood care oil by hand in the family garage. So was born the brand that eventually found its place into households across America. Some 65 years later, the company is going strong.
NASCAR has always ruled auto racing in the U.S., and though attendance has declined in recent years, NASCAR produced revenue of $660 million in 2017. But internationally, the king of racing is Formula 1, generating revenue of over $1.83 billion in 2017. With 21 events held around the world last year, F1 likely produces more revenue per event than any other sport.
In the investing world, those with superior information usually make the most money. And possibly no group has better information on public companies – and profitably acts on it – than corporate insiders at small-cap biotech and medical technology companies.
When screening insider trades, my interest is always piqued when I see both top executives of a company buying shares. It implies that the two people with the best information on that company agree the shares are a good value. That’s what just happened at FS KKR Capital Corp (FSK). Both the Chief Investment Officer (CIO) and the CEO, along with a director, purchased a total of $495,000 of their company’s stock.
If you’re an officer or director of a public company, this is your worst nightmare: You’re sipping coffee at work one morning when a FedEx package is dropped on your desk. Inside you find a letter from the SEC notifying you of a court date to answer charges of trading on inside information. A scenario to be avoided for sure. However, here’s the problem: The U.S. has no insider trading laws. What? I can hear you saying, then how is it that white collar criminals do time for profiting from secret information? Good question.
In May of 2015, Nelson Obus’s lawyer opened his client’s trial by saying that either the hedge fund manager is an honest man or "the lamest insider trader in history." Twelve years after he was first charged by the SEC for insider trading, Obus, the manager of New York-based hedge fund Wynnefield Capital Inc., was found not guilty by a jury. Fast forward to January 14, 2019 and Obus just submitted an insider filing to his nemesis the SEC, disclosing that his fund purchased 20,000 shares of Landec Corp. (LNDC) at $11.33. It’s a trade that investors may want to note – not because of any alleged impropriety, but because the stock being bought may be an attractive opportunity.
Question: If you’re a top hedge fund manager and the value of your highest conviction stock suddenly drops by 20%, what do you do? Answer: You buy more. Late in 2018, investors panic-sold en masse. Indiscriminate selling. Babies thrown out with bathwater. While the public freaked-out about interest rates, trade wars and recessions, leading hedge funds added to their best ideas.