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Berko: Insiders have billions of dollars, as well as patience

By Malcolm Berko

Published: August 6, 2017, 6:05am

Dear Mr. Berko: If I knew when insiders — for example, officers and directors or Warren Buffett and Carl Icahn — made their purchases, I could do the same and increase my chances of making money. Could you give me the names of some big companies in which insiders have recently taken positions? I’ll buy the shares and, I hope, make a quick profit.

— S.F., Norman, Okla.

Dear S.F.: Besides billions of dollars, these insiders have something you don’t: long-term patience. Yes, one can make money following insiders, but patience is their hole card. Buffett and other corporate big shots are long-term investors. They put their bucks where their mouths are, and they season their investments for several years, allowing revenues, earnings and dividends to grow and improve values. Be patient and you can be rewarded.

• Archrock Partners LP (APLP-$15.06) is a $562 million-revenue company in the natural gas compression industry. APLP designs, owns, installs, operates, services and maintains the equipment that provides compression services to its customers. APLP, yielding 7.6 percent, has 65 million shares outstanding. Archrock Inc. repurchased 11 million shares at $15.20 last November.

• American Homes 4 Rent (AMH-$23.02) is an internally managed real estate investment trust that acquires, renovates and leases single-family homes. This $900 million-revenue company has 257 million shares out, and the 0.9 percent dividend is risible. Wayne Hughes, an AMH director, bought 3 million shares at $22 between November and March.

• Walgreens Boots Alliance (WBA-$80.71) is the nation’s second-largest drugstore chain, with $118 billion in revenues and a dividend yielding 1.9 percent. Stefano Pessina, executive vice chairman and CEO, bought 2 million shares at $81.41 in November, and Ornella Barra, the co-chief operating officer, bought 124,000 shares at $80.93 in February.

• Apollo Global Management (APO-$28.50) provides investment services to people and institutions with huge gobs of money, as well as manages and launches hedge funds and mutual funds for clients. Its impressive fixed income department manages and employs hundreds of billions of dollars of various kinds of debt. APO has $2 billion in revenues, 187 million shares outstanding and a 7 percent dividend. Tiger Global Management purchased 6.5 million shares in April and May for between $25.06 and $26.68.

• International Flavors & Fragrances (IFF-$134.63) has been a favorite of mine for several years. IFF creates, manufactures and supplies flavors and fragrances used in cosmetics, beverages, foods, pharmaceuticals, snacks, personal care products and candies. IFF is a $2.8 billion-revenue company with a 1.85 percent dividend. There are 79 million shares outstanding, and Winder Investment bought 1 million shares between March and May, paying an average price of $130 a share.

• Icahn Enterprises LP (IEP-$52.22) is an international investment firm that operates gaming casinos, hotels, planned communities and golf clubs and invests in real estate, agriculture, aerospace, food packaging, railroad equipment, marine equipment, metals et al. This $16 billion-revenue company has an attractive 11.4 percent dividend plus 156 million shares outstanding. In February, Carl Icahn bought 2.6 million shares at $53.81, and he now owns about 14 million shares.

• Liberty SiriusXM Group (LSXMK-$45.75) is a satellite radio company transmitting music, sports, entertainment, comedy, news and traffic and booked $5.1 billion in annual revenues last year. LSXMK has 222 million shares outstanding and doesn’t pay a dividend. In April, Ted Weschler, a director, bought 6 million shares at $39, and Berkshire Hathaway (Warren Buffett’s company) also bought 6 million shares at $39.

• Tronc Inc. (TRNC-$12.63), formerly Tribune Publishing Co., owns nine daily newspapers — the Los Angeles Times, the Orlando Sentinel, The Baltimore Sun and the Chicago Tribune, to name a few — plus 150 weeklies. TRNC also has a syndication business that provides daily news to over 2,000 media and digital publishers. TRNC has $1.6 billion in revenues, no dividend and only 36.4 million shares out. Director Patrick Soon-Shiong bought 19 million shares between June 2016 and March at an average cost of $14. Director Michael Ferro bought 4.5 million TRNC shares between November and February at an average price of $14.20, and Merrick Ventures bought 4 million shares at the same time and same price.

Good luck.

Malcolm Berko addresses questions about stocks. Reach him at P.O. Box 8303, Largo, FL 33775 or mjberko@yahoo.com.

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