A Bargain? Insider Buy That Look Cheap By The Book (Value)

Insider buying slowed last week as corporate executives opted to spend their money on Christmas gifts instead of company stock. However, there were still a few noteworthy trades.

A trio of Fisker Inc. (FSR) insiders, including the Chief Executive Officer (CEO) bought a combined 35,505 shares for a total of $263,124. (1)

Fathom Holdings Inc. (FTHM) CEO, Josua Harley acquired 18,000 shares of the real estate services company, investing $97,835. (2)

Director Robert Dixon purchased 2,000 Generac Holdings Inc. (GNRC) shares at $97.27, writing a check for $194,550. (3)

Each of the insiders listed above have a solid history of being on the right side of the trade. However, insider activity at G-III Apparel Group, Ltd. (GIII) checked off more of our criteria. Two executives and a director combined to mark up our Cluster, Commitment, and Past Performance boxes.

CEO Morris Goldfarb, Vice President (VP) Jeffrey Goldfarb, and Director Victor Herrero cluster bought on the same day, December 5, 2022. CEO Goldfarb committed $3.13 million, and VP Goldfarb has a solid track record. (4)

G-III Apparel designs, sources, and markets women’s and men’s apparel in the United States and internationally. Its products include outerwear, dresses, sportswear, swimwear, women’s suits, and women’s performance wear; and women’s handbags, footwear, small leather goods, cold weather accessories, and luggage.

The company markets apparel and other products under the proprietary brand names, including DKNY, Donna Karan, Vilebrequin, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Sonia Rykiel, Black Rivet, G-III Sports by Carl Banks, and G-III for Her; and licensed brands, such as Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Levi’s, Guess?, Kenneth Cole, Cole Haan, Vince Camuto, and Dockers.

It has licenses with the National Football League, Major League Baseball, National Basketball Association, Major League Baseball, and National Hockey League, as well as approximately 150 U.S. colleges and universities.

VP Jeffrery Goldfarb last bought in January 2013 when he added 3,000 shares to his portfolio at $33.82. Just six months later, the VP did what he normally does, sold GIII at $48.74. (5) That’s a 44% return in no time flat. Since April 2010, the VP sold a little more than $6 million in stock. Meanwhile, his two buys combined to reach $347,696.

CEO Morris Goldfarb predominately sells, as well. He’s collected more than $189.5 million since March 2007 while buying a touch more than $8 million of GIII beginning in September 2011. (6) The CEO’s most recent $3.135 million purchase is three time more than his next closest purchase of $1.05 million in July 2019.

It’s our opinion, based on experience, the more they spend, the more they are committed to the trade.

Wall Street believes the GIII insiders might have made the correct call as analysts predict the apparel company will hit $16.50 in the next year. (7). As we type, the stock trades at $13.40 with a 52-week range of $11.60 on the low end and $31.70 up top.

For 2023, the Street forecasts earning per share (EPS) of $3.17 compared to $2.99 this year. Sales are expected to inch forward to $3.19 billion, up from 2022’s projection of $3.15 billion.

OVERALL: By many definitions, G-III Apparel Group, Ltd. (GIII) appears to be a value stock. Shares are priced at just 20 cents per every dollar in sales (P/S). Meanwhile, the industry trades at closer to 1 times revenue.

GIII’s trailing price to earnings ratio (P/E) is 3.72 compared to peer group average of 9.36. GIII’s book value per share stands at $34.16, meaning it trades for about a third of book versus 2.91 for competitors.

GIII is not a sexy stock, but it trades with valuations similar to distressed companies. With a beta of 2.5 (S&P500=1), the apparel stock is highly volatile and only appropriate for investors with maximum risk tolerance and a time horizon of at least 18 months.

 

1 – https://www.secform4.com/insider-trading/1720990.htm

2 – https://www.secform4.com/insider-trading/1753162.htm

3 – https://www.secform4.com/insider-trading/1474735.htm

4 – https://www.secform4.com/insider-trading/821002.htm

5 – https://www.secform4.com/insider-trading/1465338.htm

6 – https://www.secform4.com/insider-trading/1007772-2.htm