Insider Buying Edition
Good morning. It has been a pretty busy week. Earning reports are starting to drop so all Alpha Letter Pro members be on the lookout for updates on names I cover. My goal is to give brief overview of any earning release in the Telegram group chat and then a more formal writeup here.
If you missed it I recently published a new article on a company that just sold some assets. The stock remains risky but is an equity stub and worth a look for guys who like high levered shitcos. Finally, if you haven’t noticed Alpha Letter was rebranded to Grit Alpha. Nothing will change going forward but the name. Still the same writer and expect the same content.
Now before we get into the notable insider buys this week, first a word from today’s sponsor…
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Bark, Inc. (BARK) had a couple of insider buys over the past week. The Executive Chairman purchased 34,700 shares and the CFO bought 100K shares. Despite having a negative unit economic business model, it is a pretty interesting setup. The stock has crashed to all-time lows, from $18.5 per share to only $1.45 per share. Business model is basically a subscription service for dogs (dog treat boxes, treats, etc.). Unit economics are negative. In a zero percent interest rate environment this probably works. In a 5% rate the model is broken. But there is enough cash on the balance sheet and a new CFO. Could be worth a flyer, or at least worth your time to monitor it. If they can make the model profitable it could get interesting.
The CFO of NGL Energy Partners (NGL) purchased 50,000 shares. This is a pretty interesting de-leveraging energy play that was initially brought up to me from an Alpha Letter subscriber. I know the assets decently well but have never gotten around to writing up the opportunity, which was a mistake because the stock price has surged recently. The company owns midstream assets and will likely continue to perform well should energy prices remain elevated. I don’t have a position here and have been hesitant on taking a position as I don’t want to file a K-1 as a holder of a MLP.
A small trade for a director of only 55 shares, but still worth mentioning since Ohio Valley Bank (OVBC) is trading under book value. The stock price has come down recently, likely on the bank taking non-cash losses on their bond portfolio as interest rates have moved up, which impacts shareholder equity — a key way bank investors value banks. Nonetheless, there is a 3.16% yield and a P/E ratio of only 9.73x. It probably isn’t the cheapest bank out there but there is probably some mean reversion here if rates come down.
We had two insider buys at Bank of the James Financial Group (BOTJ), the Treasurer who bought 41 shares and a director who bought 1,000 shares. The bank is trading a bit above book value but the P/E ratio is only 6.79x and the stock is trading off a bit. The market cap is only $61 million so anyone who does their homework on the name can be an expert. There is a 2.42% yield as well and the dividend was recently raised.
Another small bank with insider buying seems to be the trend here. The CFO of Shore Bancshares (SHBI) purchased 500 shares for $17.40 in the open market. The stock price is pretty choppy and has fallen recently on what looks to be a merger announcement. The deal is an all stock deal and the parent company expects Shore’s EPS to be 40% accretive by 2024. The bank is trading under book value and there is a decent dividend. If you are interested in this I’d read up on the merger and see if you are comfortable owning the parent. The parent, The Community Financial Corporation (TCFC) has a P/E of only 7.65x and is trading at 1.23x book value.
Altisource Portfolio Solutions S.A. (ASPS) is a pretty interesting name that had several insider buys: CFO bought 14k shares, Chief Legal Compliance Officer bought 2k shares, a director bought 20k shares and the CEO bought 40k shares. What is interesting is the stock price has just collapsed from $17 per share to just $5.43 per share in just a couple of months. Ian Bezek, a great analyst, wrote up the opportunity in January and I suggest anyone interested in distressed financial assets to read his report.
I have talked about Unifi Inc. (UFI) in the telegram channel before and owned it for a quick trade in the past. The CFO just bought an additional 7,500 shares in the open market. The stock price is beaten down from terrible earnings. But the company is real estate heavy and probably trading close to liquidation value at this point.
This one is just a joke at this point given the name, sub-$10 million market cap and probably the lack of a business model. But Crypto Co (CRCW) is probably one to keep on your watchlist if crypto ever gets back to a hype again. The CEO bought 125k shares and the stock is trading at an all time low. I have no idea if there is actually a business model here but it might be a fun one to watch.
Those are the noticeable insider buys this week. Let me know if you dig into any of the names.
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