A top-level insider has deeper insight into their own company’s operations than any outside analyst or fund manager could ever hope to obtain. These insiders are the smart money which means that if they are buying company stock, investors should take note.
Here, we are going to highlight some interesting insider purchases at Braemar Hotels and Resorts Inc (BHR:US). Braemar Hotels and Resorts is a real estate investment trust that is focused on hotels and luxury resorts in the USA as well as the Virgin Islands. It’s traded on the New York Stock Exchange and currently has a market capitalization of $313 million.
Braemar Hotels and Resorts Inc: Insider Buying
Form 4 filings show that on 9 July, three insiders at Braemar Hotels and Resorts purchased stock. Chief Accounting Officer Mark Nunneley purchased 9,000 BHR preferred shares at a price of $22.50 per share. This purchase cost the insider approximately $200,000. Jeremy Welter, an Executive Vice President, bought 4,500 BHR preferred shares at a price of $22.50 which cost him around $100,000. And Matthew Rinaldi, a Director, purchased 4,444 BHR preferred shares at a price of $22.50. This cost the Director close to $100,000.
The fact that three insiders have purchased stock simultaneously is very bullish in our view. This buying pattern – which is known as ‘cluster buying’ – tells us that, within the company, there is a consensus of opinion that the stock is undervalued at present. Our Insider Model views sentiment within the company as very positive.
It’s worth noting that these three purchases represent the largest amount of insider buying at Braemar within a quarter for several years. This suggests that the insiders have a high level of conviction in their purchases.
Braemar Hotels and Resorts has been severely impacted by Covid-19, however, the latest quarterly update was encouraging. For June, revenue generated per available room was $211.43 – a 366% increase on June 2020. Meanwhile, Revpar for the second quarter is expected to be 871% higher than Q2 2020 and only 20% lower than Q2 2019.
"We continue to be pleased with the recovery trends we are seeing at our hotels driven by strong leisure demand at our luxury resort properties. Comparable RevPAR for all hotels increased $186.72 during the quarter, based on ADR of $379.73 and 49.2% occupancy,” said Richard J. Stockton, Braemar's President and Chief Executive Officer.
“Looking ahead, new bookings have been strong and we believe Braemar is well-positioned to continue to execute on its disciplined strategy for growth."
Considering the reassuring uplift in revenue and a brighter outlook for the group, we see the recent insider trading at Braemar Hotels and Resorts as bullish. It suggests the insiders believe the market is undervaluing the shares and that they expect the company’s recent positive trends to continue.