Boohoo Group PLC (BOO:LN)
12-month performance: +11%
Insider activity: Bullish
Buying pattern: Large purchases from Co-Founders
Recent news: Newspaper highlighted poor working conditions
Boohoo Group is a UK-based online fashion retailer that owns a number of popular brands including Boohoo, PrettyLittleThing, Nasty Gal, MissPap, Karen Millen, and Coast. Operating a test-and-repeat model that brings the latest trends to customers in a matter of weeks, the company serves fashion-conscious consumers globally. It is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalisation of £2.8bn.
After rising more than 100% between April and June, Boohoo shares crashed in early July after an article in The Sunday Times highlighted poor working conditions at a clothing factory in Leicester linked to the online fashion retailer. Not only did the newspaper claim that workers at the factory were being paid significantly less than the minimum UK wage but it also said that there were few measures in place to protect workers against Covid-19. In response, Boohoo came out and said that the conditions highlighted by the newspaper were totally unacceptable and that it would urgently review its relationship with any suppliers that had subcontracted work to the manufacturer. It also said that it would launch an immediate independent review of its supply chain.
Source: 2iQ Research
What looks interesting here is that last week, Boohoo Co-Founders Mahmud Kamani and Carol Kane both purchased large amounts of Boohoo shares. On 16 July, Kamani purchased five million Boohoo shares, spending £10.7 million on stock, while Kane bought two million Boohoo shares, spending £4.3 million on stock. In addition, Non-Executive Director Iain McDonald purchased 50,000 CFDs on Boohoo shares on the same day. We see these large insider purchases as a bullish signal. They suggest that these insiders expect the company to overcome the challenges it is currently facing and that they expect the share price to rebound.