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Post by dh4mizzou on Jan 4, 2024 15:57:34 GMT -5
This more of a rhetorical question really.
Why would ANY company executive sink money into a stock that they may believe is being manipulated to the point where the executives believe that the share price is being suppressed? Wouldn't a smart executive wait until they were sure that any manipulation had ceased?
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Post by prcgorman2 on Jan 4, 2024 15:58:23 GMT -5
I think it's about optics, not necessarily to maximize return for the insiders who buy. I totally cannot speak from the perspective of a public company insider (I'm an insider of BD Inc. and that's about it) but if I were one and I had the opportunity to telegraph my confidence in my company by paying market price for a few shares and give the shareholders something positive to think about, knowing the pieces were falling into place for a nice ramp up in sentiment and value so it wouldn't actually cost me anything (probably the opposite), why the hell would I choose NOT to do it? Seems so simple. In fact it's commonly accepted by the investment community. Yet i'm amazed by the lengths some go to espouse convoluted theories against it. Fascinating. "For every complex problem, there's a solution that is simple, neat, and wrong." - H.L. Mencken
Provide some evidence regarding what professional investors think are good "optics" for insider buying, then apply those criteria to MNKD executive compensation, and then please share what you find. |
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Post by longliner on Jan 4, 2024 16:00:43 GMT -5
Seems so simple. In fact it's commonly accepted by the investment community. Yet i'm amazed by the lengths some go to espouse convoluted theories against it. Fascinating. "For every complex problem, there's a solution that is simple, neat, and wrong." - H.L. Mencken
Provide some evidence regarding what professional investors think are good "optics" for insider buying, then apply those criteria to MNKD executive compensation, and then please share what you find. It's just thread stalking me prc, don't let the little things get to you.  |
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Post by BD on Jan 4, 2024 16:25:26 GMT -5
OK, all valid points, and tbh I don't remember off the top of my head how much buying the insiders of my past long investments did.
I guess it's because I didn't really care, other than a momentary "Yay" or "Bleh" when I heard about them, as it didn't influence my investing(speculating) decisions.
This is why I'm not in business except for myself, I have few political/business skills and even fewer social skills to deploy in such a setting.
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Post by hellodolly on Jan 4, 2024 16:36:58 GMT -5
I think it's about optics, not necessarily to maximize return for the insiders who buy. I totally cannot speak from the perspective of a public company insider (I'm an insider of BD Inc. and that's about it) but if I were one and I had the opportunity to telegraph my confidence in my company by paying market price for a few shares and give the shareholders something positive to think about, knowing the pieces were falling into place for a nice ramp up in sentiment and value so it wouldn't actually cost me anything (probably the opposite), why the hell would I choose NOT to do it? This IS the EXACT moment when a CEO could take advantage of the conditions as a result of how he/she has set the table. If there was ever a time, given everything we/they know, this would be the time. Not necessarily because it shows confidence, although that's the optics, rather now is the time because going forward their actions may result in an increase in SP they may not see again. |
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Post by prcgorman2 on Jan 4, 2024 16:55:07 GMT -5
I think it's about optics, not necessarily to maximize return for the insiders who buy. I totally cannot speak from the perspective of a public company insider (I'm an insider of BD Inc. and that's about it) but if I were one and I had the opportunity to telegraph my confidence in my company by paying market price for a few shares and give the shareholders something positive to think about, knowing the pieces were falling into place for a nice ramp up in sentiment and value so it wouldn't actually cost me anything (probably the opposite), why the hell would I choose NOT to do it? This IS the EXACT moment when a CEO could take advantage of the conditions as a result of how he/she has set the table. If there was ever a time, given everything we/they know, this would be the time. Not necessarily because it shows confidence, although that's the optics, rather now is the time because going forward their actions may result in an increase in SP they may not see again. I can agree NOW would be a good time in the context of the recent announcement. It's the rest of the logistics in achieving (and measuring success of) good optics that complicate things.
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Post by cretin11 on Jan 4, 2024 17:24:33 GMT -5
Seems so simple. In fact it's commonly accepted by the investment community. Yet i'm amazed by the lengths some go to espouse convoluted theories against it. Fascinating. "For every complex problem, there's a solution that is simple, neat, and wrong." - H.L. Mencken
Provide some evidence regarding what professional investors think are good "optics" for insider buying, then apply those criteria to MNKD executive compensation, and then please share what you find. I hadn’t done this in a while, but just did a google search for “is insider buying a bullish indicator” and the results were similar to last time I checked. Recommended reading for anyone interested, though not especially surprising or complicated. |
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Post by prcgorman2 on Jan 4, 2024 17:36:26 GMT -5
"For every complex problem, there's a solution that is simple, neat, and wrong." - H.L. Mencken
Provide some evidence regarding what professional investors think are good "optics" for insider buying, then apply those criteria to MNKD executive compensation, and then please share what you find. I hadn’t done this in a while, but just did a google search for “is insider buying a bullish indicator” and the results were similar to last time I checked. Recommended reading for anyone interested, though not especially surprising or complicated. Right, it's not a problem to find bullish articles on the topic. The harder part is finding anything that looks at the issue academically and provides insight on what it means and what it takes to achieve anything useful and how to estimate and measure the success of any given effort. There's some out there so I was encouraging you to educate yourself and then use those insights to evaluate what it would take and whether it makes sense for MNKD executives. I'm skeptical and disinclined but if you're certain you're right, that's how you can prove your point beyond posting banal assertions. |
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Post by mnkdfann on Jan 4, 2024 18:45:10 GMT -5
MNKD gets 10%, Sagard gets 1%…. Which means Sagard gets 10% of what MNKD gets. If your math were correct and MNKD got $400m, then Sagard gets 10% of that. Thank you for correcting my math.... If UTHR revenue on Tyvaso DPI = $4B/yr (currently its at ~$1B/yr), then MNKD gets $400M/year (less 10% to Sagard) = $360M/yr. Sagard gets $40M/yr. $150M divided by $40M/yr = 3.75 years for Sagard to get their $$ back!Is the quick analysis above correct? If so, didn't Mannkind drastically short-change itself by selling off a long-term royalty stream for so little? Even worse, with interest rates heavily anticipated to drop in the next year, the present value of the long-term royalty stream will probably increase by, conservatively, at least 20% in the next year or two. Discuss? |
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Post by cretin11 on Jan 4, 2024 19:02:16 GMT -5
prc I sincerely enjoy our debates and certainly respect your tenacity on this issue. Maybe there are academic articles on the topic proving or disproving that insider buying is a bullish indicator. I’ll decline your suggestion to search for them, as I’m content with the banal assertion (aka common sense accepted logic) that insider trading is indeed a bullish indicator. If you find any academic, peer reviewed if possible, articles to the contrary please share the link and I’ll gladly review.
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Post by agedhippie on Jan 4, 2024 19:04:15 GMT -5
I think it's about optics, not necessarily to maximize return for the insiders who buy. I totally cannot speak from the perspective of a public company insider (I'm an insider of BD Inc. and that's about it) but if I were one and I had the opportunity to telegraph my confidence in my company by paying market price for a few shares and give the shareholders something positive to think about, knowing the pieces were falling into place for a nice ramp up in sentiment and value so it wouldn't actually cost me anything (probably the opposite), why the hell would I choose NOT to do it? This IS the EXACT moment when a CEO could take advantage of the conditions as a result of how he/she has set the table. If there was ever a time, given everything we/they know, this would be the time. Not necessarily because it shows confidence, although that's the optics, rather now is the time because going forward their actions may result in an increase in SP they may not see again. Lol. I would be more self-interested. If someone unaffiliated is prepared to put in the work to suppress the share price I would (after consulting the in-house lawyers) be backing up the truck. It is a chance to buy the shares at a one time discount. As an added advantage seeing the CEO or board members buying heavily will help break the suppression and bring forward the point at which you make out like bandits. Suppression is vanishingly rare, mispricing is far more common and far riskier as a buying proposition because they may be right. |
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Post by agedhippie on Jan 4, 2024 19:17:25 GMT -5
Thank you for correcting my math.... If UTHR revenue on Tyvaso DPI = $4B/yr (currently its at ~$1B/yr), then MNKD gets $400M/year (less 10% to Sagard) = $360M/yr. Sagard gets $40M/yr. $150M divided by $40M/yr = 3.75 years for Sagard to get their $$ back!Is the quick analysis above correct? If so, didn't Mannkind drastically short-change itself by selling off a long-term royalty stream for so little? Even worse, with interest rates heavily anticipated to drop in the next year, the present value of the long-term royalty stream will probably increase by, conservatively, at least 20% in the next year or two. Discuss? It's over-simplified. The net revenue has to get to $4B and that's not happening overnight, and second I think it's pretty certain that there will be an extra $45M or $50M milestones so I would have used $200M rather than $150M. It is a good deal for Sagard though because it's a 20 year revenue stream. It's the same principle as selling an annuity - think JG Wentworth  |
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Post by prcgorman2 on Jan 4, 2024 19:49:07 GMT -5
This IS the EXACT moment when a CEO could take advantage of the conditions as a result of how he/she has set the table. If there was ever a time, given everything we/they know, this would be the time. Not necessarily because it shows confidence, although that's the optics, rather now is the time because going forward their actions may result in an increase in SP they may not see again. Lol. I would be more self-interested. If someone unaffiliated is prepared to put in the work to suppress the share price I would (after consulting the in-house lawyers) be backing up the truck. It is a chance to buy the shares at a one time discount. As an added advantage seeing the CEO or board members buying heavily will help break the suppression and bring forward the point at which you make out like bandits. Suppression is vanishingly rare, mispricing is far more common and far riskier as a buying proposition because they may be right. What was said on the conference call was “under-valued”, not “suppressed”. I agree that insider buying would underscore that assertion much better than it just hanging out there unsupported. On the other hand, my gut says MNKD has been heavily manipulated from time to time so “supressed” might be how the execs feel versus “under-valued”. If you thought the price has been manipulated and suppressed, seemingly at will (ah, but whose will?), would you have the guts to throw a lot of your salary at insider buying? Now, if there was an ESPP and it permitted generous buying, at a discount, then the buy can be hedged, but even then, is there any guarantee the action will yield the desired result? Obviously, no. It’s easy to bravely talk about how other people ought to spend THEIR money, but if it was your money, how would you behave? I’ll help cretin11, a little. One of the more interesting articles (Putnam blog) on insider buying as an indicator of future positive share price action used $400,000 purchase size as a rule of thumb as the floor for a meaningful indicator, dependent upon salary of the executive. If their salary was 20x $400,000 it would mean less. The point here is, somebody, in this case a Putnam blogger, had to pick a number that says, “buy”. Ok, fine, so far so good. Who has $400,000 of disposable income sitting about available for the purchase? Probably nobody. That much money is invested somewhere. Real estate, art, whatever. So I assume insider buying on a significant scale is not a whimsical undertaking. There were other articles that described how to assess whether a “buy” was indicated based on studying insider buys and related price action over various companies over time. So, if we want to generalize, fine, whatever, insider buying. Blah, blah, blah. If we want to be serious, somebody pick a number, or some numbers, and back. it up with empirical evidence why that number (or those numbers) get it done. Money talks, the rest walks. |
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Post by awesomo on Jan 4, 2024 19:54:11 GMT -5
timhanewich.medium.com/examining-the-correlation-between-insider-buying-and-subsequent-stock-performance-c7e9163455feTo answer these questions, we will assess the performance of S&P 500 components following insider purchases made between 2010 through 2019. Results
The evidence clearly shows that, on average, stocks will outperform following an insider purchase in both the short and long term. In the short term, this outperformance is sometimes as much as double the typical capital return. In the long term, this edge hovers around 415 basis points above the typical capital returns you would see in a non-insider purchase period.
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Post by BD on Jan 4, 2024 19:54:45 GMT -5
I don't know about anyone else, but I consider a buy to be more bullish than a sale to be bearish. The sales may be the only way an insider can raise cash because life happens (divorce or otherwise. I had an unexpected need for cash recently and I just had to dump stuff. I tried to take a little from every possible source, but someone focused on, say, some particular sale of mine because it happens to be of shares of the company I work for, would not be aware of the context).
OTOH, if I see an insider choose to buy shares, that's a pretty unambiguous endorsement of that equity.
So now tell me how I'm oversimplifying it, because I assume I probably am.
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