Insider buying can provide investors with valuable insights. Insiders sell company stock for a wide range of reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some interesting insider buying at Dirtt Environmental Solutions Ltd (DRT:CN). Dirtt Environmental Solutions is a Canadian company that specializes in interior construction. It offers a virtual reality visualization platform along with vertically-integrated manufacturing to design, configure and manufacture prefabricated interior solutions for commercial spaces. The company is listed on the Toronto Stock Exchange as well as the NASDAQ Global Select Market and currently has a market capitalization of CAD $486 million.
Dirtt Environmental Solutions: Insider Buying
Our data shows that since 14 July, Dirtt’s largest shareholder, 2NW LP, has purchased stock on three occasions. The trades are listed below:
● 14 July: Purchase of 440,298 shares @ $4.17 per share
● 15 July: Purchase of 1.202 million shares @ $4.43 per share
● 16 July: Purchase of 22,394 shares @ $4.50 per share
Combined, these three purchases were worth a total of $7.2 million.
During the period, another 10% shareholder, Shaun Noll, also made a number of smaller purchases.
19% Increase in Position Size
22NW LP is a Seattle-based hedge fund founded by Aron English in 2015. The firm focuses on investment opportunities within North American equity markets. It specializes in small and microcap investments and has a multi-year investment horizon.
This trading activity stands out due to the fact that 22NW has increased its position in Dirtt quite substantially. Before these trades, the hedge fund owned around 8.5 million Dirtt shares. Now, however, the fund owns 10.1 million shares. That represents an increase of approximately 19% which suggests that the hedge fund is very confident that the stock is set to move higher.
Dirtt Environmental Solutions continues to be impacted by the pandemic. For the first quarter of 2021, revenue came in at USD $29.5 million, 28% lower than the figure posted a year earlier. Meanwhile Q1 adjusted EBITDA was -$11.4 million versus -$5.5 million a year earlier.
However, the company believes that it is past the worst point of the pandemic and that growth will pick up this quarter. “We believe the first quarter will be the low point in the pandemic construction cycle and are optimistic that revenues in the second quarter will approach or return to the quarterly ranges experienced in the first half of 2020,” said CEO Kevin O’Meara in the company’s Q1 results. “We are seeing anecdotal evidence through our sales channels that business confidence, particularly in the United States, is improving," he added.
Dirtt also believes that it will emerge from the pandemic in a strong position to generate growth. “Having remained committed throughout 2020 to the prudent execution of our strategic plan, resulting in major enhancements of our commercial and manufacturing capabilities, we believe we will be able to emerge from the pandemic in a position of strength to drive sustained growth,” said O’Meara. The company noted that it now has over 40 strategic account relationships in various stages of development compared to 35 at year-end.
In light of this outlook, we see the insider buying here as a bullish indicator.