Dear Old Friend,
I told you not to trust them. Goldman Sachs (GS) rug-pulled energy traders Monday by cutting its year-end oil price forecast.
For two months – and two OPEC production cuts - Goldman projected a pop “into the $90s” due to supply woes. Sellers used short-term pops to dump oil.
Then, just days after its “bullish” commentary… Goldman cut its 2023 forecast by 10%.
I told you not to trust them. Don’t trust words from self-interested banks (who could well be on the other side of the trade). Trust signals. Trust momentum.
You can put a lot of faith in insider buying numbers, for instance. They don’t lie.
In fact, I like what they’re saying now…
Three CEOs Just Bought Into Strength
I have three charts for you. They’re all related. If you’re “bearish”, you must see these. If you’re bullish, same goes.
In the last 24 hours, three interesting insider buying alerts hit my inbox. I track insider activity throughout the day for Flashpoint Elite, then detail the top activity in our premarket report each morning.
Not only have CEOs bought shares late into this first-half rally, but the executives are also buying for the first time in years.
These are big bets on the 2023 recovery of some very interesting names.
After more than a year of standing on the sidelines, Asana (ASAN) chief Dustin Moskovitz (a Facebook co-founder) is buying shares of his software company.
Moskovitz was a big buyer of stock when it was over $130 per share in November 2021. He was buying for months in 2021 as the stock price crumbled, but abruptly stopped around March 2022.
Today, ASAN stock stands at roughly $22.50. Last week Moskovitz bought about $3.4 million in shares.
Now, ASAN is expensive; it’s unprofitable and trading at 8.5 times sales. But the CEO is buying… at nearly 100% higher than 52-week lows in December 2022 of $11.32.
Asana is also up more than 70% to start the year. Momentum remains strong, and the 15% short float might need coverage. Shares popped 5.8% after hours on the news of the CEO buying.
Next, we have Omnicell (OMCL). Over the last five years, executives have sold $85 million in shares, and they barely bought anything. The only purchase in the last five years happened in May 2021… until this week.
Again, we have another CEO buying stock into strength. OMCL is up 40% to start the year.
Finally, this one really caught my attention: AutoNation (AN).
There’s no shortage of people anticipating a recession, and tons of awkward questions about consumer spending and auto lending standards.
Yet, here we are with AutoNation, pushing back toward 52-week highs, and the CEO is loading up on the stock.
Over the last five years, executives have sold a stunning $1.11 billion in shares. Over the same timeframe, they’ve bought just $1.45 million in stock. It’s safe to assume that a lot of executive pay is linked to options and stock. So, when someone buys… it pays to take notice.
Over the last five years, executives have rarely put their money on the table. Once again, we have another CEO buying shares into strength. AutoNation shares are up more than 34% since January.
And the CEO just bought 7,000 shares for $1.01 million in cash.
Most investors might be surprised that executives are buying up shares after such a remarkable rally in all three to start 2023.
But the simple fact is they’re buying here because they anticipate more strength, even in the face of economic weakness. As Peter Lynch once said: "Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise."
These three bets stand out during this hated 2023 market rally.
Momentum Remains “Green Hot”
My colleague Shah Gilani suggests we’re on the cusp of the most hated bull market in quite some time.
It’s hard to disagree with the sentiment. I’m not shorting this market yet. Momentum has been very strong since June 1. Even if it’s obvious that the Fed must raise interest rates by another 50 to 100 basis points.
But remember, the economy is not the market… and the market is not the economy.
Bankruptcy Haikus: A Farewell to Instant Pot
Finally, we must say goodbye to a kitchen classic. Last night, we learned that Instant Brands – the maker of Instant Pot pressure cookers and Pyrex glassware – has gone bankrupt.
Plenty more bankruptcies will follow this year.
What can we do about it? We can bet against zombie stocks during negative momentum periods. And we can write simple farewell Haikus to say goodbye. Today, I say goodbye to Instant Pot.
Pressure builds within,
Instant pot transforms rawness,
Gourmet flavors bloom.
Over the first five months, we saw more corporate bankruptcies compared to any similar period since 2010, says S&P Global Market Intelligence. But it’s only going to heat up even more.
I hope you like reading a lot of Japanese poetry. I’ll be busy.
See you out there,
Garrett Baldwin
Florida Republic Capital (Available on Substack)
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.