Research shows that following insider buying at smaller companies tends to be a more profitable strategy than following insider buying at larger firms. Smaller companies are less researched than larger companies, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small US company, Bluegreen Vacation Holding Corp (BVH:US). Bluegreen Vacation is a vacation ownership company that markets and sells vacation ownership interests and manages resorts in popular leisure and urban destinations. It is listed on the New York Stock Exchange and currently has a market capitalization of $469 million.
Bluegreen Vacation Holding: Insider Buying
Our insider transaction data shows that two insiders at Bluegreen Vacation have purchased stock recently. On 13 May, CFO Raymond Lopez purchased 5,000 shares at a price of $19.00 per share, spending $95,000 on the stock. On the same day, Chief Sales Officer Dusty Tonkin purchased 10,500 shares at a price of $18.79, spending $197,300 on the stock.
This insider buying activity is worth highlighting for a couple of reasons. Firstly, these are top-level insiders that have bought stock. They are likely to have a good read on sales trends and business performance.
Secondly, these trades have increased the size of the insiders’ positions significantly. Tonkin’s trade has increased the size of his position by 51%. Meanwhile, Lopez’s trade has increased the size of his position by 43%. This suggests that these insiders are confident the stock is set to move higher. Our Insider Model views this buying activity as bullish.
Pent Up Demand
In Bluegreen’s recent first-quarter results, posted on 10 May, the company stated that demand for its resort stays is rising now that the Covid-19 pandemic is subsiding. All of its resorts are now open, and overall average occupancy rates were approximately 70% at resorts with sales centers during the first quarter of 2021.
Bluegreen said it was encouraged by the enthusiasm of its owners to travel to its resorts. It believes its core strategy of primarily offering a ‘drive-to’ network of resorts had facilitated occupancy during the pandemic reopening. The company said it is optimistic that this model will continue to serve as a growth driver.
“The demand for resort stays from Bluegreen Vacation Club Owners has steadily improved,” said Alan B. Levan, Chairman and CEO. “While unscientific, pent up demand, optimistic consumer sentiment, and additional positive market trends appear to be the controlling drivers of a broad wave through the recovery roll-out. We believe these market fundamentals benefit Bluegreen greatly and we are optimistic of productive improvements in VOI sales and vacation package sales going forward,” he added.
In light of this update, we see the insider buying here as bullish.