Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger companies, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight an interesting insider purchase at a small US-listed company, Bark Inc (BARK:US). Bark is a pet care company that designs toys, treats, food, dental care, and other products for dogs. A subscription-based business, it has around 2.3 million active customer subscriptions at present. It is listed on the Nasdaq and currently has a market cap of $426 million.
Insider buying at Bark Inc
Our insider transaction data shows that on August 17 and August 19, two insiders at Bark Inc bought company stock. Those who bought shares were:
- Board member David Kamenetzky (91,832 shares @ $2.47 per share)
- Founder, Chairman and CEO Matt Meeker (11,400 shares @ $2.18 per share)
Combined, the two insiders invested around $251,395 in stock.
Consumer and food technology investor
Mr. Kamenetzky is a premier consumer and food technology investor and a former executive at Mars Incorporated – the parent company of Pedigree Petfoods, Iams, and Royal Canin. This means that he is likely to have an excellent understanding of Bark, and its investment potential.
What stands out here is that Mr. Kamenetzky has increased the size of his holding by 82% with this trade. The fact that the insider has upped his stake by such a large percentage suggests that he sees considerable value in the stock right now.
Bark’s recent Q1 results showed that the company is growing at a healthy rate at the moment.
For the period, revenue was $131.2 million, a 12% increase year over year, and ahead of the company's guidance of $130 million. Meanwhile, average order value was $31.07, up 6% year on year. At the end of the period, the company had 2.276 million subscribers versus 1.952 million at the end of June 2021.
"We hit the ground running in fiscal 2023, executing across all of the key priorities that we laid out for the year. We are acquiring higher-value customers, growing our average order value at a healthy rate, and introducing more customers to our offerings in Food and Dental," said Matt Meeker, Co-Founder and CEO.
Looking ahead, the company reiterated its fiscal year 2023 revenue outlook of $556 million (versus $507 million for fiscal 2022) and raised its fiscal year 2023 adjusted EBITDA outlook to $(33) million, from $(36) million. It also noted that recent improvements to margin and cost structure should enable the company to achieve greater operating leverage and accelerate its path toward profitability.
In light of these solid results, we see the insider buying here as a bullish indicator.