Insider buying can provide investors with clues about a stock’s potential. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight a large insider purchase at Camping World Holdings Inc (CWH:US). Camping World Holdings is an American outdoor and camping retailer that specializes in selling recreational vehicles (RVs), RV parts and accessories, and RV services. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.5 billion.
Camping World Holdings: insider buying
Form 4 filings show that on 9 November, board member Stephen Adams purchased 200,000 shares in Camping World Holdings at a price of $24.55 per share. The total cost of the transaction was $4.9 million. This purchase increased the size of the insider’s holding by 400%.
Source: 2iQ Research
This insider purchase is significant for several reasons. Firstly, it’s a very large purchase. The size of the purchase indicates that Adams is extremely confident that the CWH stock is undervalued at present.
Secondly, Adams' last purchase, in March 2020, was timed very well. Our records show that insider purchased 3,600 shares on 13 March at a price of $6.73 per share. In the next three months, the stock rose 350%.
Finally, Adams has served on the board of directors of Camping World Holdings since its formation, and been Chairman of subsidiary CWGS, LLC since February 2011. It’s likely that he has an excellent understanding of the business and its future prospects.
Strong Q3 results
Camping World Holdings recently posted an excellent set of third-quarter results. For the period, revenue was up 21% to $1.7 billion while net income increased 337% to $154.8 million. As a result of this strong financial performance, the group updated its 2020 adjusted EBITDA guidance from a range of $460 million to $490 million to a revised range of $495 million to $515 million. The company also announced a stock repurchase program.
“I am very pleased with our team’s performance in the third quarter. Coming off of an extremely positive second quarter, demand remained strong and we were able to achieve record-breaking third quarter results,” commented Chairman and CEO Marcus Lemonis.
After a strong run between March and August, Camping World Holdings stock has pulled back recently. Adams clearly sees this share price weakness as a buying opportunity. We see this insider buying activity as a bullish signal.