Cluster buying amongst the top executives is one of our favorite insider buying with a purpose angles. A cluster buy is when multiple insiders from the same company purchase their stock simultaneously. In our opinion, we find it to be more powerful when the cluster consists of upper-level management.
A trio of C-suite E2open Parent Holdings, Inc. (ETWO) executives combined to buy 116,280 shares of ETWO for a total investment a little north of $1.3 million. Chief Operating Officer (COO) Peter Hantman acquired 6,280 shares for $75,039.70; Chief Financial Officer (CFO) Janik Jarett bought 10,000 shares for $114,535; and Chief Executive Officer (CEO) was the biggest spender, adding 100,000 shares for a more than $1.1 million. (1)
It could be simply a case of the right sector, at the right place and time as the reason the trio of C’s headed to the open market and bought their stock. E2open provides a fully cloud-based software platform to orchestrate complex global supply chains. ETQO’s software combines networks, data, and applications to provide an integrated, mission-critical platform that allows customers to optimize their supply chain across channel shaping, demand sensing, business planning, logistics, global trade, manufacturing, and supply management.
Here are just of a couple of recent supply chain-related headlines:
- Wells Fargo CEO says supply chains ‘will get solved’ in ‘6-to-12 months’ – Yahoo News
- Newington Toy Store To Close Due To Supply-Chain Issues – Patch
- What America’s Supply-Chain Backlog Looks Like Up Close – The Wall Street Journal
- Don’t expect supply-chain or price relief any time soon – NY Post
- Why supply chain chaos and inflation could last into 2022 – Vox
Current crisis notwithstanding, Verified Market Research reports, “the Global Supply Chain Analytics Market size was valued at USD 5.06 billion in 2020 and is projected to reach USD 13.68 billion by 2028, growing at a CAGR of 13.22% from 2021 to 2028.” (2)
Short-term, companies like E2open should benefit as governments and corporations scramble to rectify current supply chain disruptions. Longer-term, ETWO and peers should market demand for data analytics to help with accurate forecasting, risk management, order optimization, inventory control, and real-time supply chain execution.
Wall Street sees E2open taking advantage of the opportunity. Analysts forecast consensus sales growth of 34% this fiscal year and 36% next year. The street anticipated revenue hitting $617.28 million next year, up from $453.61 million this year. (3)
As we type, the average company in the industry trades at 11.2 times sales (P/S). If E2open hits next year’s top-line target of $617.28 million and trades at the typical industry price to sales ratio of 11.2, then the stock would be valued at $20.40. ETWO’s current price is $12.24.
Shorter-term, if bulls can carry ETWO above technical resistance and close above $13, then in could challenge its 52-week high of $14.58. E2open began trading on Friday, February 5, 2021, through a merger with a special purpose acquisition company (SPAC). From our experience, hitting a new high post-IPO can be a bullish buy signal as no stock is owned above the high. It’s technical resistance-free trading.
Overview: E2open Parent Holdings, Inc. (ETWO) could benefit from the current supply chain disruption and overall market trends in the long run. Investors looking for exposure to supply chain management, might consider following the lead of the three C-suite ETWO executives.
E2open Parent Holdings, Inc. (ETWO) is only appropriate for aggressive investors with above average risk tolerance.
1 – https://www.secform4.com/insider-trading/1800347.htm
2 – https://www.prnewswire.com/news-releases/supply-chain-analytics-market-size-worth–13-68-billion-globally-by-2028-at-13-22-cagr-verified-market-research-301387925.html
3 – https://finance.yahoo.com/quote/ETWO/analysis?p=ETWO