The Insiders Fund in the Top Ten Long-Short Equity Funds for January
BarclayHedge awards The Insiders Fund Top Ten Fund placing 4th amongst all long-short hedge funds for the month of January 2021.
March 5th, 2021
The Insiders Fund continued its torrid tear notching up over 11% return in January and over 15% in February. The Fund is now up over 28% net of fees for the first two months of the year. During this same period, the S&P 500 returned 1.5%.
Portfolio manager, Harvey Sax, said the market for equities is obviously good but there are warning signs that market participants are chasing momentum and performance. “When people buy stocks simply because they are going up, they will sell them for the same reason- they are going down”, Sax said.
Sax said the market is full of companies with sexy stories and incomprehensible valuations. The Insiders Fund focuses on companies where management has shown they are willing to invest material amounts of their own money at or near prices the general public can. “As a group insiders are more likely to be buying their company’s stock closer to a 52 week low than a 52 week high,” Sax said.
“Market bottoms and sell-offs always end when waves of insiders buy stock. I’ve been following this kind of behavioral analysis for over twenty years and without fail, corrections don’t end until insiders step up their buying. Unfortunately, insider selling is not as predictive. Insiders sell for many reasons but buy for one reason only, to make money.”
The Insiders Fund has a blog at http://theinsidersfund.com/blog and which highlights every week the companies that have notable insider buying. During the months of January and February we highlighted all of these buys below:
Berkshire Hathaway up 10.79%
At Home Group up 51.85%
Riley Financial up 28.13%
Alliance Data Systems up 40.74%
Charles Schwab up 18.83%
Coty up 19.24%
Avis Budget up 29.73%
Chevron up 10.70%
THE INSIDERS FUND is a long-short equity fund that invests in companies at or near prices that management has been willing to invest significant amounts of their own money in. After all, who knows a business better than the people running it? You’ve always heard the best information is “inside information”. The SEC mandates that officers, directors, and 10% shareholders file a Form 4 detailing buying and selling in their company’s stock within 48 hours. The SEC makes this info public immediately upon receiving it.
This is as close to “insider information” that an ordinary investor is likely to see.
The Insiders Fund was the 4th best performing long-short equity fund in the United States for the month of January 2021with a return of over 11% net of fees according to Barclay Hedge, a leading independent alternative database vendor. In 2019, it was also the 4th best performing long-short fund in the U.S with a return of 33% after all fees.
You can find these kinds of investment nuggets by following The Insider’s Fund blog, or our social media sites on Twitter, Facebook, and Linkedin although be aware that The Insiders Fund may have positions long or short in these names and makes no promise to inform readers of any changes in our holdings. The newsletters and social media posts do not purport to be financial advisors and any or all of these posts may be inappropriate for your own financial circumstances. Readers are urged to consult with their own advisors or one of our registered investment advisors at the General Partner of the Fund, Alpha Wealth Funds.
If history does repeat or even if it just rhymes, there is a lot more to come in this market according to Sax. “There have been more than a few comparisons to the “Roaring Twenties”, the boom period after the last global pandemic, The Great Influenza of 1918.
It’s hard to find value whether it’s in the stock market or the house next door. At 22.5 times forward earnings, the S&P 500 is far from cheap, and the Shiller price/earnings ratio, at 33.9 times, is even higher. Those valuations make sense only relative to zero interest rates in the U.S., as even expensive multiples look attractive when the alternative is earning nothing on cash.”
The election is over and there is promising vaccine news. The Fed is accommodative and a new Democratic administration will be anxious to boost the economy. History doesn’t repeat, it rhymes and this is the new roaring twenties. Sax warns, “It’s easy to get carried away in this kind of market but paying attention to what the insiders are buying with their own money is the best way to keep you from losing yours.”
THE INSIDERS FUND invests in companies at or near prices that management has been willing to invest significant amounts of their own money in. The Fund is sold by prospectus only to accredited investors. Past performance is no guarantee of future results. The Fund is independently administered and audited since its inception in 2010 by a PAOCB member.
Alpha Wealth Funds is the General Partner of The Insiders Fund as well as two other emerging hedge funds, the Volatility Advantage Fund and soon to be offered, Alpha Low Volatility Fund. Warren Buffett would be the first to tell you that emerging fund managers can often outperform legendary investors such as himself because smaller size funds have so many more opportunities to move the needle.
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