Last Christmas we highlighted a privileged purchase by an independent director of Chewy and wrote the following about the company:
With quiet periods related to earnings on top, I didn’t expect to see much of it Privileged activity last week, but I was pleasantly surprised to see a number of interesting purchases last week. A couple of REIT mortgage CEOs were on our list of the top 5 prime deals, but the purchase that caught my eye the most was the sixth biggest purchase of the week. James StarCEO of Canadian investment firm Longview Asset Management bought Chewy for $ 1.79 million (NYSE: YOU) open market shares. This is Chewy’s first inside information purchase in more than two years, as the pet-focused company made a roller coaster ride from its $ 22 IPO in June 2019 to a high of nearly $ 120 in February 2021 before returning large portions of those gains. and dropping to the low $ 50.
Pandemic-related tailwinds fueled by pure gaming e-commerce retailers such as Chewy and Wayfair (W) have slowed and this is reflected in the slowdown in revenue growth and loss of funds. Chewy. The gross margin of 26.4%, despite an improvement of 90 basis points year-on-year, is not so exciting either. Given the cash flow statement, the company is generating a significant free cash flow and non-cash share clearing expenses have been reduced for several quarters. Over the past 12 months, while net income was only $ 10.8 million, free cash flow was $ 169 million. With a business value of $ 24.4 billion, the stock is certainly expensive at a multiple EV / FCF, but it doesn’t look as expensive at an EV / sales of 2.86. If the company can grow or even maintain its current growth rate (24.14% last quarter) while better controlling spending, it would be worth exploring Chewy more.
Mr.’s last purchase Star last week nearly tripled its $ 1.79 million previous purchase and shares are down nearly 48% from its previous purchase. Since we last wrote about the business, both net income and free cash flow have turned negative over the next twelve months. The company that paid part of the balance to be paid from its growth accounts negatively affected the free cash flow two quarters ago. Revenue growth continued to slow and year-on-year revenue growth reached 13.73% last quarter. The good news is that the company reported a staggering GAAP profit of 4 cents per share last quarter compared to expectations of a loss of 13 cents.
Tax revenue in the first quarter of 2023 of $ 2.43 billion was also a new record for the company. Gross margins, while down 10 basis points year-on-year, rose compared to the fourth fiscal quarter of 2022. I’m still disappointed with the company, but it’s clear that Mr. Star has a divergent opinion. Given that he was on PetSmart’s board prior to his acquisition of Chewy in 2017, he clearly understands the company’s history and is likely to be optimistic about its future.
Welcome to the 623rd edition of Insider Weekends. Insider buying declined last week with $ 59.53 million in shares compared to $ 60.26 million the previous week. Sales also fell to $ 1.18 billion compared to $ 802.51 million the previous week.
Buy / Sell Relationship:
The Preferred Sale / Purchase ratio is calculated by dividing the total preferred sales in a given week by the total preferred purchases that week. Last week’s adjusted ratio rose to 19.74. In other words, experts sold almost 20 times more shares than they bought. The Buy / Buy ratio this week has been unfavorable compared to the previous week, when the ratio stood at 13.32.
Notable Preferred Purchases:
1. Chewy, Inc. (HERE): $ 28.72
Director James A. Star acquired 180,636 shares of this pet-focused e-commerce retailer, paying $ 27.71 per share for a total of $ 5 million. 144,509 of these shares were acquired indirectly by Downstream Partners.
|P / E: N / A||P / E forward: -287.2||Industry P / E: 46.71|
|P / S: 1.32||Price / Book: 206.62||EV / EBITDA: -253.9|
|Market capitalization: $ 12.08 million||Average Daily Volume: 6,305,488||52-week interval: $ 22.22 – $ 97.74|
2. United Airlines Holdings, Inc. (UAL): $ 41.16
Director Edward Shapiro acquired 50,000 shares of this airline, paying $ 44.71 per share for a total of $ 2.24 million.
|P / E: N / A||Front P / E: 5.67||Industry P / E: N / A|
|P / S: 0.46||Price / Book: 3.71||EV / EBITDA: -85.71|
|Market capitalization: $ 13.45 million||Average Daily Volume: 13,810,452||52 week interval: $ 30.54 – $ 57|
3. Nerdy, Inc. (NRDY): $ 3.15
CEO Charles K. Cohn acquired 438,400 shares of this online tutoring and learning provider, paying $ 2.95 per share for a total of $ 1.29 million. These shares were acquired indirectly by Rarefied Air Capital LLC.
|P / E: N / A||P / E forward: -6.3||Industry P / E: N / A|
|P / S: 1.86||Price / Book: 6.54||EV / EBITDA: -1.74|
|Market capitalization: $ 285.17 million||Average Daily Volume: 881,214||52-week interval: $ 1.59 – $ 13.49|
4. Rocket Companies, Inc. (RKT): $ 7.9
The shares of this technology-driven real estate, mortgage and e-commerce company were acquired by 2 privileged people:
- Chief Executive Officer Jay Farner acquired 118,300 shares, paying $ 8.44 per share for a total of $ 998,688. Mr. Farner increased its stake by 4.78% to 2,593,907 shares with this purchase.
- Director Matthew Rizik acquired 5,200 shares, paying $ 8.26 per share for a total of $ 42,929. Mr. Rizik increased its stake by 2.77% to 192,802 shares with this purchase.
|P / E: 4.38||Front P / E: 9.52||P / E industry: 7.51|
|P / S: 1.39||Price / Book: 1.73||EV / EBITDA: 4.2|
|Market capitalization: $ 15.7 million||Average Daily Volume: 4,727,380||52-week interval: $ 6,912 – $ 21.36|
5. Carvana Co. (CVNA): $ 22.01
Brand director Ryan S. Keeton acquired 40,000 shares of this e-commerce platform to buy and sell used cars, paying $ 24.74 per share for a total of $ 989,800. Mr. Keeton increased its stake by 116.72% to 74,269 shares with this purchase.
|P / E: N / A||Front P / E: -7.19||Industry P / E: 15.09|
|P / S: 0.28||Price / Book: 24.79||EV / EBITDA: -26.1|
|Market capitalization: $ 3.91 million||Average Daily Volume: 9,947,961||52-week interval: $ 21.61 – $ 376.83|
You can view the full shopping list from this Preferred Purchase Page.
Notable Preferred Sales:
1. The Carlyle Group Inc. (CG): $ 35.96
Director David M. Rubenstein sold 2,000,000 shares of this asset management company for $ 38.67, generating $ 77.34 million with the sale.
|P / E: 4.88||Front P / E: 7.83||Industry P / E: 12.82|
|P / S: 1.64||Price / Book: 2.2||EV / EBITDA: 5.33|
|Market capitalization: $ 13.01 million||Average Daily Volume: 2,494,465||52-week interval: $ 34.62 – $ 60.62|
2. PTC Inc. (PTC): $ 109.09
Director Blake D. Moret sold 551,106 shares of this software and services company for $ 117.53, generating $ 64.77 million with the sale. These shares were sold indirectly by Rockwell Automation.
|P / E: 26.95||Front P / E: 20.35||Industry P / E: 48.91|
|P / S: 6.79||Price / Book: 6.12||EV / EBITDA: 28.06|
|Market capitalization: $ 12.76 million||Average Daily Volume: 769,969||52-week interval: $ 96.55 – $ 153.73|
3. Cactus, Inc. (WHD): $ 50.03
The shares of this company of wellheads and pressure control equipment were sold by 2 privileged people:
- President and CEO Scott Bender sold 562,336 shares for $ 54.04, generating $ 30.39 million with the sale.
- Senior Vice President and COO Joel Bender sold 542,336 shares for $ 54.00, generating $ 29.29 million with the sale.
|P / E: 51.21||P / E forward: 23.94||Industry P / E: N / A|
|P / S: 7.59||Price / Book: 6.12||EV / EBITDA: 22.09|
|Market capitalization: $ 3.8 million||Average Daily Volume: 468,358||52-week interval: $ 31.65 – $ 64.18|
4. Arista Networks, Inc. (ANET): $ 94.96
Development director Andreas Bechtolsheim sold 312,988 shares of this networking company for $ 103.68, generating $ 32.45 million with the sale. These shares were sold indirectly by a trust.
|P / E: 32.63||Front P / E: 22.29||Industry P / E: 19.84|
|P / S: 9.24||Price / Book: 7.05||EV / EBITDA: 27.12|
|Market capitalization: $ 29.18 million||Average Daily Volume: 1,969,430||52-week interval: $ 85.18 – $ 148.57|
5. The Allstate Corporation (ALL): $ 124.59
President, President and CEO Thomas J. Wilson sold 241,828 shares of this insurance company for $ 133.07, generating $ 32.18 million with the sale. These shares were sold indirectly by TJW Options LLC 2013 Series.
|P / E: 10.35||Front P / E: 9.51||Industry P / E: 10.39|
|P / S: 0.7||Price / Book: 1.62||EV / EBITDA: 6.69|
|Market capitalization: $ 35.16 million||Average Daily Volume: 1,873,255||52-week interval: $ 106.11 – $ 144.46|
You can see the full list of sales from this privileged sales page.