Three Shorts on Insider Selling
Our screening process for insider buying and selling has yielded three short ideas: Arrowhead Pharmaceuticals, Inc. (ARWR), CDK Global, Inc. (CDK), and Computer Programs & Systems, Inc. (CPSI). Aside from each company's insiders selling into price weakness (a sign of future underperformance), we have identified further pressures expected to push the share prices lower, offering short opportunities.The Edge View...
ARWR: Considering the two main directors selling large amounts after the stock bottomed then doubling after the low, William Waddill’s status as a CPA and seeming to know how to evaluate the value of the company, and the significant pressures on ARWR’s revenue to keep cash flowing toward R&D costs, this is a prime candidate for a short.
CDK: A deteriorating leverage situation will continue with automotive sales down, as CDK provides software services to its industry partners, indicating a potential short opportunity given auto sales are not expected to resume at the previous highs. Additionally, Ms. Williams’ sales have consistently been into price weakness (selling on the way down to current levels).
CPSI: We believe CPSI may see further correction as it fails to gain traction in the market and losing business from its customers will continue to impact the company’s operations. Furthermore, COO and President Christopher Fowler’s track record of selling stock into weakness (consistently on the decline) indicates this downward trend may continue.
Arrowhead Pharmaceuticals develops medicines that treat intractable diseases by silencing the genes that cause them. Using a portfolio of RNA chemistries and several modes of delivery, the company's therapies trigger the RNA interference (RNAi) mechanism to induce knockdown of target genes. The company is focused on developing drugs for diseases with a genetic basis, typically characterized by the overproduction of one or more proteins that are involved with disease. The company's pipeline includes, among others, ARO-AAT, a candidate for the treatment of liver disease, and ARO-APOC3, which is designed to reduce production of Apolipoprotein C-III, a component of triglyceride rich lipoproteins.
CDK Global is a provider of subscription-based software and technology solutions for automotive retailers. The company is organized into two main operating groups, which are also reportable segments: CDK North America, which provides technology-based solutions, including its Dealer Management System (DMS) products and data management and business intelligence solutions; and CDK International, which provides automotive retailers with primary DMS solutions and provides automotive retailers and original equipment manufacturers a variety of services, custom programming, consulting, implementation and training solutions, as well as customer support solutions outside of the United States and Canada.
Computer Programs and Systems provides healthcare solutions and services. The company provides its products and services through Evident, LLC (Evident), TruBridge, LLC (TruBridge), and American HealthTech, Inc. (AHT). Evident provides acute care electronic health record (EHR) solution, Thrive, and related services for community hospitals and their physician clinics. TruBridge focuses on providing business management, consulting, and managed IT services, along with its revenue cycle management solution for all care settings, regardless of their healthcare information solutions provider. AHT provides post-acute care EHR solution and related services for skilled nursing and assisted living facilities.
The Edge Group - Global Fundamental Catalyst Investing. The Edge provides investors with access to hidden corporate value from Global Special Situations using a pioneering approach to investments. Founded in 2005 by fund management and investment banking professionals to provide high quality, private equity-level research on Global Corporate Divestitures for the benefit of fundamental event-driven, growth and value-oriented investors in this difficult to track, but proven investment space.
The Edge will look to screen and analyze include Spinoffs; Reverse Morris Trusts; Squeeze Outs; Privatizations; Demutualization; Deep Discounted; Rights Issues; Rights Offering; Restructuring; Insider Purchases / Buying Change of Management / CEO Change; Deteriorating fundamentals; Post-Bankruptcy; Reorganization; Tender Offer; M&A Deals; Secondary Offering; Share Swap; Thrift Conversions; Share Buybacks; Activist; Mergers. All analyzed from a fundamental point of view.
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