Top-level corporate insiders such as CEOs and CFOs tend to have the most up-to-date information on their businesses. If they’re buying company stock, it’s generally a sign that the outlook for the stock is attractive.
Here, we are going to highlight the purchase of company shares by top-level insiders at Callaway Golf Co (ELY:US). Callaway Golf Co is an American golf equipment manufacturer that also sells golfing apparel and accessories. The company also recently acquired Topgolf – a sports entertainment business that appeals to golfers and non-golfers alike. It is listed on the New York Stock Exchange and currently has a market capitalization of $4.27 billion.
Callaway Golf Co: Insider Buying
Our insider transaction data shows that on March 14, two insiders at Callaway Golf Co bought stock. Those who bought shares were:
- President/CEO Oliver Brewer III (16,000 shares @ $21.55 per share)
- CFO Brian Lynch (15,000 shares @ $21.73 per share)
In total, the two insiders spent just under $700,000 on Callaway Golf Co stock.
Intimate Knowledge of the Business
These insider trades are worth highlighting for a couple of reasons.
Firstly, Mr. Brewer has been at Callaway Golf Co for a decade while Mr. Weddell has been working at the company for over 20 years. This means that the two insiders are likely to know the business, and the market it operates in, extremely well. Mr. Brewer was also CEO of Adams Golf for 10 years. At Callaway, he has demonstrated impressive leadership skills, driving innovation within the business.
Secondly, our data shows that these two senior insiders have spent over $1 million on company shares since the end of last year. This indicates that they strongly believe that the market is undervaluing their company’s shares.
Callaway Golf saw very strong growth in full-year 2021 as consolidated net revenue flew 97% higher to $3.1 billion.
The business saw growth across all of its segments, and this translated into an impressive increase in profitability. For the year, EBITDA amounted to $445 million, up 170% on the year prior.
Topgolf finished the year strongly and the company indicated it expects to open 10 to 11 new venues over the next twelve months. It is also working on a new game that will appeal to a younger gaming focused audience.
The group noted that demand for golf clubs and balls has been high, and it expects this to continue throughout 2022. As a result, the company is looking for full-year EBITDA to come in at between $490 million and $515 million. The business had $753 million of available liquidity at the end of the year, which will allow it to invest in Topgolf and drive growth significantly.
“I am pleased to announce another quarter of strong results. The quarter topped off a truly outstanding year for Callaway and I am extremely proud of the global team for their efforts. This was a record year in many aspects, and I am excited about the opportunity to build on this strong foundation as we look ahead to 2022 and beyond. Overall, we have never been more confident in the direction of this business and the opportunity for growth ahead,” said Mr. Brewer.
The knock-out results at Callaway, and exceptionally bullish outlook statement, lead us to conclude that the recent insider buying at the company is a bullish development. It would appear that two senior figures within the business are very confident that the momentum within the business will continue and that the shares will be re-rated by the market in the future.