The Profit Investigator

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"Dirty 30" Evaluation Tool Part 9

The goal of the final part of the D30 evaluation explanation will entail two things:

  1. Why do I have insider purchases here if I don't grade them?
  2. My final thoughts about the D30.

Well as you see we have reached the final portion of the D30 and to be completely honest it is the easiest to understand. Below is the Hormel (HRL) evaluation that we have been working off of for the past two months.

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INSIDERS

What I am going to highlight here is the last portion that is titled "INSIDERS". This table is simply a way that I go about looking at what the inside sentiment is about the company. Is this a full proof way to time the buying? Of course not! What it is though is a great way to decide which stock to purchase (or sell even) if you are stuck between a few.

As you can see over the last 12 months HRL has been purchased more by insiders than it has been sold. In fact even the six month time-frame isn't skewed heavily towards the sell side. This means to me that the company insiders believe that there is some money to be made still off of this stock. Now it is split pretty evenly which I believe backs up my opinion that there really isn't a lot of meat on the bone (maybe 10%) so I wouldn't expect to see the insiders to be going crazy on the purchase side here.

Another example would be BGFV which you can see here. I believe it is well undervalue, and it appears insiders agree. Now the 12 month time frame looks different. If we back this up 9 months ago (when the 12 month would have been the 3 month) you would have been able to see that insiders were unloading at a time when BGFV was between $15-$18. This is right around my target and buy under price. This also points out to me that the insiders believe it is overvalued a bit (or hard times may be coming) and are going to take some profits.

In short, this is simply a way for me to try to get a little bit more insight on when is a good time to buy or sell. It is not always fool proof but I believe insider buying and selling (in large quantities) are a good way to see what potential profit is left in the tank.

 

FINAL THOUGHTS

First off, I just want to thank all of you that have read, commented, and even went to the request for to request D30 analysis. I encourage you to go there and request as much as you want and I will analyze stocks for free! You can find that here.

My major thoughts after going through the last two months of writing explanations is that this is even much deeper than I expected. What began as a simple way for me to quickly estimate stock value, turned into something that I use as a base of every investigation I do. This is no longer a quick hitter but the start to a journey of discovery about what a company actually looks like. 

While it isn't a sure thing I do believe that the D30 gives a true look into a company's value and risk. I will continue to use this going forward and look forward to improving it. Currently I am working on a D30 that adjusts quarterly on its own, but it is a bit larger task. 

Again thank you for all of those that read the series and I hope that it has helped you learn a thing or two!