2iQ Insider Brief: Dunelm Group PLC (DNLM: LN) G-III Apparel Group (GIII: US) John Menzies PLC (MNZS: LN)

Kaloyan Kolev 23 July 2019

Dunelm Group PLC (DNLM: LN)

 12-month performance: +77%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Raised profit guidance

 

Dunelm Group is a UK-based home furnishing retailer. Specialising in furniture, curtains and blinds, bedding, and lighting, the group operates approximately 170 superstores throughout the UK. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £1.8 billion.

Dunelm shares have risen around 65% this year, driven by a number of strong trading updates. In June, the company raised its annual profit forecast, and then on 10 July the group advised that it expects full-year profit to be at the upper end of management's view, due to higher consumer demand. Clearly, Brexit uncertainty has not impacted the company.

DNLM_LNSource: 2iQ Research

Looking at insider transaction activity, we think the recent uptrend could have further to run. We say this because in the last few days both CEO Nicholas Wilkinson and CFO Laura Carr have added to their personal holdings, which, in our view, is a bullish signal. Wilkinson spent approximately £230,000 on shares, boosting his holding by 30%, while Carr spent £96,000 on stock, boosting her holding by 44%. With two insiders boosting their holdings significantly, we think the stock has the potential to keep rising.

 

G-III Apparel Group (GIII: US)

 12-month performance: -43%
Insider activity: Bullish
Buying pattern: Large purchases from CEO
Recent news: Q2 profit warning

 

G-III Apparel Group is an American clothing company which designs, manufactures and markets a range of fashion clothing. The group has fashion licenses under the Calvin Klein, Tommy Hilfiger, and Karl Lagerfeld brands and its owned brands include DKNY and Vilebrequin. The stock is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $1.3 billion.

 

G-III Apparel Group shares have had an up-and-down year so far. Beginning the year at $28, the shares rose to $44 in late April, after Q4 profits beat expectations. However, since then the shares have fallen back to the $27 mark on the back of trade tariff uncertainty and a warning from the group that Q2 revenues and profits would be below estimates.

GIII_USSource: 2iQ Research

Analysing insider transaction activity here, we think the recent sell-off may have created a buying opportunity. We say this because since mid-June G-III Chairman and CEO Morris Goldfarb has purchased shares three times while the share price has been under the $27 mark, spending more than $2 million on stock. In our view, this is a bullish signal as it suggests the insider expects the shares to recover. Given these substantial purchases from Goldfarb, we think G-III Apparel Group shares have rebound potential.    

 

John Menzies PLC (MNZS: LN)

 12-month performance: -29%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO
Recent news: Profit warning

 

John Menzies is a UK-based logistics and support services company. Operating in nearly 40 countries, the group provides cargo handling, ground handling, and fuelling services at major airports across the world. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £358 million.

 

John Menzies shares have fallen nearly 20% this year on the back of several disappointing trading updates. In March, the group told investors that overall trading in the first two months of the year had been impacted by soft cargo volumes and difficult labour markets in the US, while in early July, the company advised that performance in the first half of the year had been below expectations due to challenges in the wider aviation market such as flight schedule reductions. However, the company did recently advise that it believes the medium and long-term prospects for the business are “sound” and that “all historical data points to recovery."

MNZS_LNSource: 2iQ Research

What we think is interesting here is the fact that since the group’s most recent trading update on 5 July, a number of insiders have purchased shares in the company. Those buying have included CEO Giles Wilson, Deputy Chairman David Garman, and Non-Executive Director Christian Kappelhoff-Wulff, who purchased 60,000 shares through his investment firm Lakestreet Capital Partners AG. This buying activity suggests to us that insiders genuinely believe that the company can recover from its current issues. With that in mind, we think John Menzies has turnaround potential.

Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.

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