Insiders have access to real-time information on their companies and often also have a wealth of experience that can help them evaluate their firms’ prospects. If they are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at Chewy Inc (CHWY:US). Chewy is an American online retailer that specializes in pet food. Through its website, customers can set up autoship subscription orders, so that they never run out of pet food, supplies, or medication for their pets. The company is listed on the New York Stock Exchange and currently has a market capitalization of $23.3 billion.
Chewy Inc: Insider Buying
Our data shows that between December 20 and December 21, board member James Star bought 32,278 CHWY shares at an average price of $55.58 per share. This trade cost the insider roughly $1.8 million and increased his holding to 74,822 shares.
Investment Management Background
Mr. Star has a background in investment management. Currently, he serves as Executive Chairman and Investment Committee Chair of Longview Asset Management LLC, a multi-strategy investment firm that invests on behalf of individuals, trusts and charitable foundations. In the past, he has served as a director or trustee of pension funds, registered mutual funds, and private companies. This background means he is likely to have a good understanding of Chewy’s intrinsic value.
What stands out about this trading activity from Mr. Star is that it has increased the size of his holding by 76%. The fact that the insider has upped his stake by such a large percentage suggests that he is very confident the stock is set to rise.
24% Revenue Growth in Q3
Like many online retailers, Chewy has faced challenges in 2021. Ongoing supply chain disruptions, labor shortages, and higher costs have all impacted the company’s bottom line, and this is reflected in the company’s share price, which has fallen from near $100 in mid-August to around $60 today.
However, Chewy’s Q3 results showed that the company continues to grow at a healthy rate, with Q3 net sales coming in at $2.21 billion, up 24.1% year on year (up 86% on a two-year stack basis) and active customers rising 14.7% year on year to 20.4 million.
And the management was confident about the future, stating: “Our ability to retain the significant revenue gains we made last year during the height of the pandemic, and then adding meaningful growth on top of that this year, clearly reflects the soundness of our long-term strategy and our efforts to build an enduring franchise to serve millions of loyal pets and pet parents. In short, we are bullish on Chewy’s future.”
Given that the long-term growth story still appears to be intact here, we see the insider buying from Mr. Star as a bullish indicator. His large purchases suggest that he expects Chewy stock to bounce back.