Sometimes the money is so over the top ridiculous, you cannot overlook the amount spent. Two insiders at Oscar Health, Inc. (OSCR) purchased a combined $16 million of the insurance products and services company last week. (1)
Chief Executive Officer Mario Schlosser acquired 57,300 shares at $17.53 for a total exceeding $1 million. That was the second trade for the CEO since OSCR’s initial public offering on March 3, 2021, when he sold more than $14 million at $39 per share. (2)
Oscar Health Founder and Director Joshua Kushner bought the other $15 million and has been loading up on the stock since late August. Kushner has invested more than $74.5 million in OSCR since August 20, 2021. (3) No matter how rich you are, $74.5 million is so over the top ridiculous, you cannot overlook it. Kushner is also the founder of Thrive Capital, which also bought $74.5 million of OSCR stock. (4) That puts Kushner in for almost a $150 million bet on Oscar Health.
If Joshua’s last name rings a bell, it’s because he is the brother of ex-President Donald Trump’s son-in-law Jared Kushner and son of billionaire real estate developer Charles Kushner.
The insurance company that offers affordable, yet high quality, Individual & Family, Small Group, and Medicare Advantage plans, as well as +Oscar, a full stack technology platform, IPOed at $39, as mentioned above, opened trading at $36 and began to slide after about two weeks of trading. It bottomed out on August 17, 2021 at $12.06.
On paper, Oscar Health doesn’t look like an inviting investment opportunity. Analysts expect the company to lose money this year and next with consensus earning targets of -$2.53 and -$1.55 in 2021 and 2022 respectively. Meanwhile, revenue is essentially forecasted to flatline year-over-year… $1.74 billion this year and $1.78 billion next year. (5)
Current sales estimates and price to sales (P/S) ratios for OSCR and the industry average P/S valuations don’t leave room, if any, to the upside. As we type, Oscar trades at 2.88 times (6) sales versus 2.3 for the typical competitor. Under current top and bottom lines expectations, Wall Street puts a one-year price target of $24.17 on the insurance company. (7)
This is where experience comes into play. We’ve seen this story before, an IPO falls in the immediate aftermath of trading, some fundamental concerns over sales/earnings growth and a large amount of insider buying. Asana, Inc. (ASAN) is the most recent example, which we wrote about in this space when the stock was at $60, ASAN trades at $114.59 as of this keystroke.
Overall: In our opinion, fundamentals don’t warrant an investment in Oscar Health, Inc. (OSCR) as a lack of sales growth and projected losses usually aren’t a winning combination. However, based on experience, when insiders load up on a stock following a post-IPO price crash, it’s worked out too many times to ignore. Plus, close to $150 million is a serious commitment aligning founder Kushner’s interest with OSCR shares heading higher.
Oscar Health, Inc. (OSCR) could be appropriate for speculative investors with a time horizon of at least 18 months.
1 – https://www.secform4.com/insider-trading/1568651.htm
2 – https://www.secform4.com/insider-trading/1844320.htm
3 – https://www.secform4.com/insider-trading/1844181.htm
4 – https://www.secform4.com/insider-trading/1877735.htm
5 – https://finance.yahoo.com/quote/OSCR/analysis?p=OSCR
6 – https://finance.yahoo.com/quote/OSCR/key-statistics?p=OSCR
7 – https://finance.yahoo.com/quote/OSCR?p=OSCR
