2iQ Insider Brief: Organogenesis Holdings Inc (ORGO: US) EssilorLuxottica SA (EL: FP) At Home Group Inc (HOME: US)

Kaloyan Kolev 16 September 2019

Organogenesis Holdings Inc (ORGO: US)

 12-month performance: -43%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors and major shareholder
Recent news: Good Q2 results

 

Organogenesis Holdings is a regenerative medicine company. The company focuses on the development, manufacture and commercialisation of advanced wound care products, and also develops a range of sports medicine products. The stock is listed on the NASDAQ Capital Market and currently has a market capitalisation of $530 million.

Organogenesis’ second-quarter results, released on 9 August, showed that the company continues to make progress. For the quarter, revenue increased to $64.9 million, up 49% on the same period last year, while the group’s adjusted EBITDA loss fell to $4.8 million, from $11.5 million in the second quarter of 2018. The group also raised its full-year revenue growth guidance to 29% to 35%, while President and CEO Gary Gillheeney, Sr. said that the company remains focused on improving its profitability profile. Since the second-quarter results, the stock has risen around 35%.

ORGO_USSource: 2iQ Research

Analysing insider transaction activity, we think Organogenesis shares could be set to continue rising. We say this because since the beginning of September we have observed purchases from a number of insiders, which, in our view, is a bullish signal. Those buying have included Co-Chairman Alan Ades, as well as major shareholder Avista Capital Partners, both of who are likely to have an excellent understanding of the company’s future prospects. With Credit Suisse recently giving the stock a price target of $9 which is 55% higher than the current share price, and multiple insiders buying, we think the outlook for Organogenesis is favourable.

 

EssilorLuxottica SA (EL: FP)

 12-month performance: +7%
Insider activity: Bullish
Buying pattern: Large purchases from Founder and Chairman
Recent news: Activist investor takes stake

 

EssilorLuxottica is a leading multinational ophthalmic company. The company designs, manufactures, and markets a wide range of lenses, frames and sunglasses to improve and protect eyesight, and also owns a world-class portfolio of brands, including Ray-Ban, Oakley, and Persol. The stock is listed on the Euronext - Paris and currently has a market capitalisation of €56.1 billion.

 

EssilorLuxottica shares rose to an all-time high recently after it emerged that US activist fund Third Point has been building a stake in the company. Third Point, which is run by billionaire investor Daniel Loeb, has a track record of pushing for changes at large-cap companies in order to improve performance, and in the past has taken activist positions in Nestle, United Technologies Corp, and Sony Corp. The hedge fund is apparently now targeting EssilorLuxottica amid a power struggle between Luxottica's founder Leonardo Del Vecchio and Essilor's chief Hubert Sagnieres, following the €48 billion merger of the two companies last year.

EL_FPSource: 2iQ Research

What we think is interesting about this situation is that billionaire Del Vecchio, who is Executive Chairman of EssilorLuxottica and already owns around one third of the company, has also been buying EssilorLuxottica shares recently. Indeed, according to our records, the insider has spent around €175 million on EssilorLuxottica shares since the beginning of August, adding a substantial number of shares to his personal holding. He has been willing to buy near the stock’s all-time high too, which suggests he is not too concerned about price. In our view, this indicates that the billionaire believes that Third Point’s activist influence could be beneficial for the company and its share price. Given Del Vecchio’s industry experience, we view his buying activity as a bullish signal. While the stock has performed well over the last three months, climbing around 23%, we think it has the potential to keep rising.

 

At Home Group Inc (HOME: US)

 12-month performance: -73%
Insider activity: Bullish
Buying pattern: Purchases from multiple insiders and major shareholder
Recent news: Poor Q2 results

 

At Home Group is a US-based home decor company. A value-oriented home decor retailer, the group operates over 200 superstores in nearly 40 states, providing consumers with a broad range of home decor products. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $572 million.

 

At Home Group shares have underperformed recently on the back of several disappointing quarterly updates. In June, the company advised that revenues and profits had been impacted negatively by “unusually adverse weather,” while more recently, second-quarter results released on 5 September missed expectations, and the group advised that third-quarter margins could come under pressure due to higher levels of inventory.

HOME_USSource: 2iQ Research

While At Home Group shares are out of favour with investors at present, an analysis of insider transaction activity reveals a bullish setup. Not only have we observed purchases from a number of top-level directors this week, including Chairman and CEO Lewis Bird III, CFO Jeffrey Knudson, and COO Peter Corsa, who between them have bought around $630,000 worth of stock, but major shareholder Cas Investment Partners LLC, a New York-based hedge fund, has also been adding to its holding recently, buying approximately $10.3 million worth of stock since 15 August. This buying activity suggests that insiders see value at current levels. With that in mind, we think At Home Group shares could be worth a closer look right now.

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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