"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra: Buy Gold and China. Sell short on pretty much everything else. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

Twitter: @kherriage

Karl Bessey

Mary Dee

Mike Budny 
Twitter: @kherriage

Saturday
Oct072017

Insider Trading and Financial Anomalies Surrounding the Las Vegas Attack

 

Insider Trading and Financial Anomalies Surrounding the Las Vegas Attack
October 7, 2017
Note: With this report, I make no claim to specific knowledge of any wrongdoing or improprieties. Instead, this report includes trading patterns, news releases and/or public record SEC filings. 
We will examine the share price movements of two gun manufacturers (American Outdoor Brands and Sturm Ruger) and the share price movement of MGM (which owns Mandalay Bay). We will also examine additional financial events surrounding MGM, including what can only be referred to as massive levels of insider selling in the shares of MGM, by the CEO/Chairman and MGM officers/directors. As you'll see, more than $200 million in MGM shares were sold in the weeks leading up to the attack.
Background. Interesting Trading Patterns in AOBC, RGR and MGM.
Over the course of my 32 years in the investment industry I have constructed a proprietary investing model that I refer to as the “VRA Trading & Investing System”. In short, its design is to track money flows in the stock market and detect sector and stock analysis/movements that then alert me as to when/where money is flowing in the markets.
For example, prior to the 2016 Presidential Elections, the VRA System noticed that the share price of gun manufacturers had begun to decline rapidly. This was one of our first financial clues that Trump might beat Clinton (Trump's strong support of 2A). As you can see below, American Outdoor Brands (AOBC, formerly Smith & Wesson), hit a high of $31/share in August of 2016. As the bottom began to fall out, it would ultimately drop 55% in price, before hitting its low price of just over $13 on 9/11/17.
The market is referred to as a "discounting mechanism" and as such, it often predicts future events. It certainly did so in the case of the election and the share price of AOBC. 
We see the same trading pattern in gun manufacturer Sturm Ruger (RGR). RGR traded as high as $73 in March of 2016 before ultimately dropping 37%, when it too bottomed within one trading day of AOBC hitting it's lows (9/8/17). Again, my system noted the rapid decline in gun stocks, which led me to believe that Trump may in fact win the election. Remember this point; both AOBC and RGR hit their lows at the same time, just over two weeks prior to the Las Vegas shooting. 
Something Changed in September
Let's now examine the trading patterns of AOBC and RGR in detail, just over two weeks "prior" to the attack. As you can see, AOBC bottomed on 9/11/17 at $13.30 before the spike higher began. From 9/11 to just after the attack, AOBC rose 23% in price. It did so on a noticeable increase in buy-side trading volumes. 
Below, we see the same chart and reaction in the shares of Sturm Ruger (RGR). From it's 9/8/17 lows, RGR bottomed at $46.25 and then spiked to $55.90 just after the attack, for a move higher of 21%.
After falling in price from early-mid 2016 to their early September 2017 lows, the two largest publicly traded gun manufacturers bottomed, then spiked higher, at almost exactly the same time. In addition, buy-side volume increases rose sharply as well. 
And, while not covered in this report (more work is needed), we also saw a spike in call option purchases in both AOBC and RGR, in the days/weeks leading up to the attack.
This final chart shows the share price of MGM (owner of Mandalay Bay) in the days leading up to the attack to present. MGM shares declined more than 10%, from 9/7/17 to recent lows. This decline occurred as some $200 million in insider selling was taking place. 
Bottom line: Beginning in early-mid September to this report, gun manufactures AOBC and RGR rose in price 23% and 21% (on higher trading volumes), while the shares of MGM fell in price by 11% (as $200 million in insider selling occurred). 
MGM: Heavy Levels of Insider Selling
As the SEC insider transaction reports below detail, from 9/5/17 to 9/12/17, approximately 6 million shares of MGM were sold by officers and/or directors of the company, totaling approximately $200 million in proceeds to sellers. Included in this group is the selling of approximately 450,000 shares by MGM CEO and Chairman James Murren (a seller of size since late July) and who appears to have sold more than 85% of all holdings. We also see that MGM Board member Grounds William Warwick sold 176 million shares of his MGM stock on 9/6/17. 
We have no indication that MGM insiders sold these 6 million shares due to any advance knowledge of the 10/1 attack. I am not making that claim. I am simply pointing out facts that cannot be in question.
But I will make a few observations:
1) If MGM/Mandalay Bay were to lose law suits associated with this attack, the downside risks to MGM share price may be extensive. 
2) We also know that MGM CEO James Murren was appointed to the Homeland Security National Infrastructure Advisory Council by President Obama in December 2013. This fact could make for some interesting depositions, as it relates to exactly what type of advanced security systems Mandalay Bay had in place, leading up to and on the night of 10/1/17. 
"The National Infrastructure Advisory Council is tasked with providing the president with advice on the “security of the critical infrastructure sectors and their information systems.” The council is composed of a maximum of 30 members, appointed by the president, from private industry, academia and state and local government."
3) I am also aware of the fact that MGM put options activity spiked as well (needs more work), beginning at the same time gun stocks were rising and MGM was falling in price. 
4) For those curious about the trading in other major Las Vegas Hotel casino stocks, during this same time frame, this also needs more work. However, I can report that at the same time MGM's share price was falling, the share prices of Las Vegas Sands (LVS) and Wynn Resorts (WYNN) were actually rising.
Closing:
In closing, let me repeat; I make no claims or assertions that anyone mentioned in this piece has done anything nefarious. They likely did not. 
The question I might ask is, "Did someone else profit from the heinous acts of 10/1/17? Possibly the planners?"
Like many of you, I am interested and I am asking questions. I also remember that during 9/11/01, reports surfaced widely in the financial media that "many, many millions" in profits were made off of the purchase of put options in the shares of United Airlines and American Airlines, the two airliners that operated the four aircraft that were hijacked on 9/11 (among other well-documented reports of large put option purchases in numerous companies that had the most exposure to a shocked US economy). 
There's more...like the recent trading pattern in OSIS, which makes "detection systems" of all kinds (similar to their subsidiary "Rapiscan", which makes the TSA body scanners that were put in place following 9/11). Many are wondering how long it might be before we are forced to walk through similar devices, as we enter hotels/casinos.
I will continue to follow this story. Should you have information that might assist in my research, you can reach me at kip@vraletter.com.
I am a proud American. I want the best for our country. Wherever the truth leads us, that is where we must go. Follow the money.
Kip Herriage
VRALetter.com

 

 

 

Tuesday
Sep192017

VRA Update: Beating Mr. Market. Liquidity Continues to Flood In. 

As the markets continue to ride the wall of worry higher, hitting fresh all time high after fresh all time high, the VRA Portfolio is not only participating, but once again, beating Mr. Market at its own game. Here are the numbers for 2017:

S&P 500: +12%

Nasdaq: +20%

Russell 2000: +6%

VRA Portfolio: +41% 

The VRA Portfolio is aggressive...always has been and always will be...and it can be most closely compared to the Russell 2000 (small cap stock index). At 41% for the VRA (to 6% for the R2K), we are outperforming the small cap index by 6.8 times (or 680%).

About once a quarter I like to cover some VRA Core Principals and Portfolio Management concepts, especially important for our newer members but key reminders for us all. 

1) Again, the VRA is highly aggressive in our approach. I use the VRA System, a proprietary combination of fundamental and technical analysis, to help place us in the highest return investments possible. The VRA approach is not the right approach for everyone, but if you practice smart money management and portfolio diversification, the VRA can help you to crush Mr. Market (as we've done here for 13 of 14 years). 

2) Most use the VRA in addition to their conservative holdings (bank savings, bonds, retirement funds, insurance, etc). Only you know what the appropriate mix is, for your investment goals and your individual risk/reward personality. 

3) I never recommend more than 10 stocks. My goal is to crush Mr. Market and to do so with a diversified, but still concentrated approach. Over the years I've seen investors that hold 50-60 or more stocks in their personal portfolio. How they stay on top of all of them, I do not know. And, when they do have some big winners, the overall portfolio barely budges. If this is your approach, I would recommend instead the use of index funds, which give you both diversification and the ability to capture the returns of the major indexes. 

That's it really. Again, from my 32 years of doing this, day after day, the investment style that I recommend is the exact style that I use personally. I am a trend following investor that combines technical analysis (based primarily on price movement) with the fundamental analysis that was drilled into me on Wall Street, plus the wild card that only time can provide...a contrarian minded instinct, applying investor sentiment to keep us on the right side of market timing. 

Not all VRA recommendations will make us money. On those that go the wrong way (with a change in fundamentals or negative price action) we will take our losses and move on...removing emotion from the equation...while letting our winners run.

Important Point: Please remember to login to your VRA Members Site, at least once/week, to view the VRA Portfolio and make sure you are positioned properly. Also please remember that I am unable to provide individual investment advice....my Wall Street days are long behind me...but I will reply to your emails personally, and answer your questions the best way I am able to. 

VRA Market Update

Some big developments caught my eye over the weekend, as I ran my VRA scans and screens. Let's cover these...

1) EVERY major US equity index is now sitting at Extreme Overbought levels. While this does not mean that the markets are going to have a major correction, it does mean that we must tread a bit more carefully. Folks, it's from these types of extreme overbought readings that short term and painful sell-offs can occur. As you know, I watch the markets internals closely, and while I see no signs of an impending and sharp sell-off on the horizon, its the things that we cannot see that usually catch us by surprise.  

2) While I prefer the AAII Sentiment Survey, as you can see below, the USA Today Fear and Greed Index now sits at 77 (it was was 17 3 weeks ago). As a contrarian, we must be aware of these changes in investor sentiment.

3) Yes, P/E multiples are high...but they do not determine market direction. Instead, liquidity determines market direction. And man, do we have lots of liquidity in todays continued record low interest rate environment (which is fueling M&A activity and share buybacks). In addition, and for the first time in history, 3 central banks are adding to already massive debt holdings by also purchasing stocks. The PBOC, BOJ and SNB now own trillions in equities and buying more with each passing day. 

Its for all of these reasons...plus the fact that the world is returning to nationalism rather than globalism (a transformational event that few talk about) that I continue to be bullish on the markets. My 3-4 year DJ target remains 30,000+.

4) Inflation is returning...I write about it often...and this is another propellant for higher equity prices. The 1000+ PHD's at the FED seem to be missing the return of inflation, but we see it everywhere we look.

Check out the chart of gold below. Inverse head and shoulders patterns can be an indication that much higher prices are on the way. Once gold breaks $1400/oz, $1700 becomes my next target. Of course, the real leverage is in the miners...we'll make fortunes in this group over the next 1-3 years.

Until next time, thanks again for reading....

Kip 

Thursday
Aug312017

VRA Update: Hurricane Harvey

Just a brief update and many, many thanks for your prayers and well wishes. We continue to be among the very, very fortunate...our home is dry and we are safe...but the number of our fellow Houstonians/Texans that cannot say the same is just staggering. Hurricane Harvey has left our area (as the waters continue to rise) and has now pummeled more of the Texas/Louisiana coast as it moved north. Absolute devastation for 100's of miles. You're never fully prepared for the horrific damage and destruction that water can inflict. We're looking at many months of recovery and rebuilding...but also know this; we will get the job done. 

Thank you again for your many calls, emails, texts and tweets...they are greatly appreciated. For those that would like to help, my advice is a donation to the Houston Food Bank at houstonfoodbank.org. Food, supplies and shelter are stretched thin. They do great local work.

Final point on Harvey. Anyone that believes the US is a deeply divided country...that we are a racist country...that we are a country at war with one another, is either a fool or is purposely misleading. Ignore the MSM that wants only to divide us. Fools indeed. Houstonians/Texans and all that have helped our area in time of real need are making this point better than I ever could. I have never been so proud to be a Houstonian, a Texan, an American. 

Thank you again.

Kip

Thursday
Aug102017

VRA Update: The Stars Are Lining up Perfectly for Precious Metals and Miners

VRA Update: The Stars Are Lining up Perfectly for Precious Metals and Miners.
Aug 10, 2017

Good Thursday morning all. First this morning, a couple of important VRA reminders...for both our LT Subscribers and especially our newbies. My investing style is hyper aggressive...if you're looking for safe, mutual fund type returns, I am probably not your guy. I have one primary goal...to make my members wealthy. In order to do this, we must crush Mr. Market. Because, he certainly enjoys doing the same to us. 
As a rule, I never recommend more than 10 stocks at a time. I believe in building a diversified portfolio, but not overly so. It's hard to make huge returns if you own a portfolio of 50 stocks. I am from the Peter Lynch school of investing. I buy a stock...or an asset...and I continue to dollar cost average into it as long as the story continues to hold up. I believe that without a good management team, the company...regardless of the quality of their product or potential...has very, very little chance of succeeding, long term. 
My VRA Trading & Investing System combines fundamental and technical analysis. Roughly 70% fundamental and 30% technical. I study global trends and macroeconomics and long term cycle analysis. Please make sure and login to your VRA Members Site to ensure that you are positioned properly. 
Today, something most significant looks to be occurring. As we've been covering, the global reflation trade is picking up serious steam. Many/most of the most important base metals...used in manufacturing and construction all over the world...are soaring in price. We're now seeing 2 year to all-time highs in the prices of copper, aluminum, lead and zinc, to name just a few. These highly inflationary advances come at a time when global stock markets are soaring as well. Make no mistake about it, global growth is back. It will be followed by global inflation. 
Now, as of this morning, gold, silver and GDX (mining ETF) look very much like they are ready to go on a serious tear. The stars looks to be perfectly aligned. As I write, gold is up another $10/oz to $1289, a more than two month high. Silver has been ramping even further higher, as its doing again this morning, with a last price here of $17.16, +1.8%. GDX is showing gains of 1.3% this am, approaching the all-important $23/share.
From a technical point of view, here's the most important event occurring this am. For the first time in months, gold, silver and GDX are each trading above their highly important 200 day moving averages (dma). Combined with the fundamental reasons that I love precious metals and the miners, should these technical breakouts hold up, a flood of buying will begin to pour into this asset class. 
In yesterdays update I shared the cup and handle formation for gold. Here it is again. I repeat, this is a highly bullish technical formation. Here's what we want to see next; a move through $1300/oz...on heavy volume...followed by a move through the 52 week high of $1360/oz. Then the floodgates open. 
This morning, lets also take a look at the cup and handle formation in GDX (below). Frankly, this chart looks even better than the chart of gold. And remember, the miners move 3-5 x faster than the underlying commodity. 
Now, here's what we want to see happen next...and folks, what I'm about to say here is super important. GDX must break through the $23 level and it must hold over its 200 dma, currently sitting at $22.57. I also want to see the breakout occur on heavy volume, preferably back to back days of 100 million shares traded. These are our bogeys...they are most important. Should these events "not" take place, it will constitute a technical breakdown. Or should I say, another technical breakdown. Precious metals and miners went through a BRUTAL bear market of 3.5 years, from 2012 to late 2015. Following the lows of 2015, the move higher has been semi-consistent, but spotty and frankly, boring. 
This has resulted in the cup and handle formation we see today...a coiled spring of significant proportion. Just one event is left...the breakouts I've detailed in this update. Gold through $1300/oz and GDX through $23...on heavy volumes. All of the corroborating evidence that I see...both fundamental and technical...says that this breakout should occur now.
Until next time, thanks again for reading...
Kip

 

Thursday
Jul272017

VRA Update: Something Big is Brewing in Precious Metals and Miners

My love affair with gold and silver...precious metals...goes back to when I was about 16. I listened in on a meeting with my father and a financial advisor as the advisor convinced my father to buy gold at $800/ounce. As you can see in the chart below, gold then proceeded to drop to $290/ounce over just the next couple of years.  

While serving as bad financial news for the Herriage family, the life experience was important for me. One, my love affair with gold was born and two, I was introduced to the importance of being an investment contrarian. When everyone is head over hills in love with an investment, as they loved gold back in 1980, that's almost always the time to consider selling that investment. 

Today, gold is rarely talked about, certainly not on Wall Street. The manipulators have suppressed the price of gold, while at the same time, global governments have printed money and issued debt like they were Weimer, Germany. From 1921 - 1924 (following the devastation of WWI), the German economy experienced a level of hyperinflation that the modern world had never seen. Before it was over, one gold mark would buy you 1 billion paper marks. By the end of 1923, $1 USD would buy you 4,210,500,000,000 German marks.  

 

 

And here's what it meant for gold investors in Germany. By November 1923, it took $87 trillion German marks to buy a single ounce of gold. #hyperinflation 

 

No...we're nowhere near this level of financial inanity/insolvency today. But then again, in 1919, how many Germans thought this could possibly be their future? Much less, within just 4 short years...?

The fear of the financial unknown...this is why we must own gold and silver today. Gold has served as the ultimate store of value for the last 5000 years. Gold remains as the only true currency on the planet. A planet that, historically speaking, has never seen a single fiat currency that has remained standing. Today, 1 ounce of gold will buy you the same high quality, tailored mens suit/womens dress that it would have purchased you 100 years ago. Since the creation of the Federal Reserve in 1913, the US dollar has lost 97% of its purchasing power, while gold has soared in value (most certainly after it was removed from the dollar peg in 1971. Thanks again Nixon).

But precious metals are more than just gold & silver. I believe that we must own the shares of the companies that produce them as well...the gold/silver miners. Remember, during the Great Depression, the single best stock to own was Homestake Mines. During the 1930's, $1000 invested into Homestake would have turned into $6,760 (by 1938), a return of roughly 600% (close to 800% with dividends)...as the rest of the stock market plunged in value. 

 

It's with this historical backdrop that I make the case again for mining stocks, particularly after the events and results we've just witnessed. I believe they are forecasting a most significant breakout that's just around the corner. This week, two global mining stock leaders, Freeport McMoran and Newmont Mines, reported earnings. Yes, their earnings reports were solid...but as always, it's the markets "reaction to the news" that I believe we should be paying the most serious attention to.   

First up, Freeport-McMoran (FCX). FCX was up a huge 15% on their earnings beat. Again, their earnings might have surprised Wall Street, but anytime a stock surges 15% it tells us that something else is likely going on. As the chart below makes clear, this ramp took FCX convincingly back above both its 50 & 200 dma and a clear break of the bearish downtrend line. This kind of one day move is rarely a one-off, particularly when it comes on the heaviest volume in more than 6 months. In gamblers parlance, this kind of move is a "big tell". I believe its telling us that the bull market for the miners is back.    

 

But FCX was not alone....Newmont Mines (NEM) ramped a big 7% as well. NEM is the worlds largest miner and as a market leader, their earnings and stock action are followed very closely. We see very similar chart action to the move in FCX, with a clear break of a bearish trend line and a breakout of both its 50/200 dma. Again, I see this as highly bullish for the entire sector. 

 

Finally for now, lets take a fresh look at GDX (miner ETF). This is where the move MUST play out for us to officially become wildly bullish again. GDX may have been up less than 1% (.91%), but gold was down .41%, making GDX's gain more impressive. 

What must we see? I want to see GDX close convincingly above both its 50/200 dma. But again, I said "convincingly", meaning that I want to see GDX close above $23/share...and yes, I prefer that it happens on strong volume (as we saw in both NEM and FCX). 

I believe that it's very possible that we get a big move higher for GDX. I can tell you that LOTS of traders are watching for exactly this. 

I first recommended gold and silver in my second-ever VRA Update (in 2003). Gold was trading at less than $400/ounce and silver was just under $5. Combined, VRA PM & mining stock related profits have topped 3000%, since inception. 

It's my belief that the coming bull market in PM's and miners will be nothing short of extraordinary. We'll soon know if the rest of the investing world feels the same way... 

Until then, thanks again for reading...

Kip