Discover more from Grit Alpha
Good morning everyone.
Last week we covered a “hidden” EV company that is trading for less than zero. They have a large pile of cash. They own a 70% interest in a publicly traded company that is up 200%. And they are right on the cusp of profitability. The market doesn’t seem to know this company even exists. Any investor who does their homework should see the clear undervaluation of this company and the potential for it to become a multi-bagger. If you missed the report you can read it here.
Today we are going to be digging into some large insider transactions. When insiders buy stock in their own company it usually means the executives and board think the stock is undervalued. Tracking insider buys is one of my personal favorite ways to find new stock ideas. In fact, it is how I found out about this company, that is up 100% today and over 220% at the peak.
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There were a couple of small insider buys at Calcimedica (CALC)) — here and here. This is a new name for me and a bit out of my wheelhouse as they are a biotech company. Nonetheless, the company has a market cap of $29 million and anyone who does their work on it could have an edge as there doesn’t seem to be much public research.
The President of South Plains Financial (SPFI) purchased $105k worth of stock in the open market. South Plains Financial is a small $400 million bank that operates out of Texas with loans mostly in the energy industry, vehicle loans and construction lending. The stock took a nosedive during the banking crisis but has quickly recovered. That being said, the stock is still down materially from YTD highs and yields 2.23% with a price-to-book ratio of 1.08x. The insider buy from the President is compelling and of size to be noted.
I have never seen this company before but the name itself, along with the insider buy of $55k, made it look pretty interesting to highlight. The company is called Fomo Worldwide (FOMO) and has a share price of $0.0003 — less than a penny. The market cap is only $2.78 million and I am not really sure what the company does. The financials look horrendous and it is probably not a name I will be buying. But the insider transaction looks interesting and anyone who does their work on this stock will probably know more than anyone else in the market on the business. Figuring out why the CEO bought $55k worth of stock might be worthwhile for a quick flip.
The CEO of Nerdy Inc. (NRDY) purchased $77k shares in the open market. Nerdy looks like it is a real company with a market cap of $510 million and revenues. The company says they have an AI technology that tutors students on high learning. This name could be one to put on your watch list as the AI bubble continues to grow.
Erasca (ERAS) is another biotech cash pile where the CEO just purchased $275k worth of stock in the open market. I will never be able to understand the tech side of this company but the insider buy is compelling and the company has $389 million of cash and only $58 million of debt on their balance sheet. Figuring out the burn rate and capital allocation will be key here.
The CFO of Tilly’s (TLYS) purchased $21k worth of stock. Tilly’s is a beaten down teen retailer that focuses on the skate and surf market. The stock is down 30% YTD and has a market cap of $197 million, $93 million of cash and no debt (backing out of operating leases). The company has historically been profitable and will likely return to generating profits sometime in the future. There are a lot of cheap retailers in today’s market and digging into Tilly’s could prove to be fruitful.
The CEO of Dollar General (DG) purchased $236k of stock in the open market after the stock took a huge nosedive from $220 per share to only $150 per share. The stock slid after some macro headwinds contributed to an earnings miss, slashed guidance and a Morgan Stanley downgrade. The company has a $33 billion market cap, so I will never become an expert on the name. But anyone who likes larger companies could do quite well here for a mean reversion play.
That is all I had for the last week of insider transactions.
Keep an eye on the Telegram Channel as the week progressives. I have a feeling there will be some interesting news on one of my favorite real estate plays this week. There are also a couple of special situations that I am watching closely that could be in play.
Have a great Monday.
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