Top insider trades (Tue, Oct 14)

How CEO Watcher Works

Good morning!

The SEC was closed yesterday for Columbus Day, so no new insider trades were filed.

Instead, we’ll do a quick case study on a specific type of insider purchase that has performed very well this year, with multiple insider purchases up well over 100%.

Also, I’m looking for a handful of hardcore CEO Watcher users to help me test out our new Discord channel.

The main benefits of the Discord are: 1) real-time notifications when new insider trades are filed, 2) my notes on specific insider trades, and 3) a place to share research on insider trades.

You will also be the first to test out the new CEO Watcher site, which includes curated feeds of high-signal insider trades, real-time insider trade updates, saving custom filters (coming soon), and custom notifications (coming soon).

If you want to join the Discord, just respond to this email. I’ll likely be sending out some invites tomorrow. Note: you must be an active, paying CEO Watcher subscriber, not on a trial or a free subscriber.

Momentum Insider Purchases (with a story)

Internally at CEO Watcher, we’ve been creating a framework to identify certain archetypes of insider trades, which allows us to create quantitative rules to identify these types of insider trades, understand the “story” for why the insider may be buying the stock (and know what to look for in press releases, earnings call transcripts, etc), and know when the story is over and it’s time to sell the stock.

One of those archetypes is the Momentum Purchase. This is when an insider is buying a stock that is already performing well (ie has strong momentum), and has a clear narrative for why that momentum will continue.

This year, the best momentum plays have been insider purchases at companies in industries that the Trump administration is focusing on. In this email, we will look at Kratos Defense (KTOS) and its 200% returns since the CEO bought the stock while it already had strong momentum.

Kratos Defense (KTOS)

Kratos is up almost 200% in the last 6 months and over 275% since we first saw the CEO buying the stock in March (and 180% since we found him buying it again in May).

For this case study, we will focus on the May 12th purchase because it was one of the first Top Insider Purchases we identified after implementing some significant upgrades to our CEO Watcher backend system in the first half of the year.

In the May 13th email, we found the CEO, who had a 100% win rate, buying $250k of the stock (his largest purchase ever).

At this point, the stock was already up 27% since his purchase in March, but the momentum was likely to continue. Trump’s administration is very much in favor of the defense industry and, just one month earlier, had signed an executive order to expedite acquisitions for the Department of Defense and strengthen the military (link). There were also numerous articles discussing the government’s focus specifically on Drone Manufacturers, which mentioned Kratos by name (link). Kratos had also secured numerous contracts with the Department of Defense in the months before the CEO Purchase (link, link, link, link).

If you had looked at the valuation multiples at the time, the stock was already quite expensive (and certainly looks much more expensive now). However, the stock had just started its move and is now up over 275% since the CEO’s first purchase in March and 180% since the purchase in May.

Identifying this as a Momentum purchase (and not a Value, Turnaround, or short-term Dip Buy) was the secret to profitably playing this stock.

United States Antimony Corp (UAMY)

Another recent CEO Watcher find that is a textbook Momentum play is United States Antimony Corp. Obviously, the US is very focused on Rare Earth Elements (REE) right now, and UAMY is right at the heart of that focus.

In the October 1st email, it was the very first stock I mentioned.

This was obviously a Momentum play because of the government’s focus on rare earth elements, the stock's 800% gain over the previous year, and UAMY's revenue growth.

The stock is already up 100% since then.

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I’ll be sharing more info and case studies about the CEO Watcher Insider Trade Archetypes in the future.

As a reminder, if you are an active, paying subscriber and want to be the first to join the Discord (and test out the new CEO Watcher website), respond to this email.

Have a great day!

Connor