Top-level company insiders tend to have the most up-to-date information on their companies. If they’re buying company stock, it’s generally a bullish development.
Here, we are going to highlight insider transactions at Landec Corp (LNDC:US). Landec Corp, designs, develops, manufactures, and sells differentiated health and wellness products for food and biomaterials markets. The company is split into two operating businesses, Lifecore Biomedical Inc and Curation Foods Inc. It’s listed on the Nasdaq Stock Exchange and currently has a market capitalization of $319 million.
Landec Corp: Insider Buying
Form 4 filings show that between 12 April and 20 April, multiple insiders bought stock here. Wynnefield Capital, a 10% shareholder whose Chief Investment Officer is on the Landec Corp Board of Directors, purchased 240,587 LNDC shares between 12 April and 14 April at an average price of $10.02 per share. This purchase – which cost the firm approximately $2.4 million – boosted their holding by approximately 18%. John Morberg the CFO, purchased 8,000 LNDC shares between 13 April and 19 April at an average price of $10.60. This increased his holding by around 64%. Dr. Albert Bolles, the CEO, purchased 9,000 LNDC shares at a price of $10.61 on 14 April, increasing his holding by around 25%. James Hall, an Executive Vice President, bought 10,000 LNDC shares on 14 April at a price of $10.62, increasing his holding by around 33%. Also, the director at Landec Corp, Patrick Walsh bought 10,000 LNDC shares on 20 April at a price of $11.26, spending a total of approximately $110,000.
This insider activity stands out for a couple of reasons. Firstly, this cluster of insider trades in such a short period of time tells us that there is a consensus of opinion within the company that the stock is undervalued right now.
Secondly, the majority of the insiders are increasing their holdings by a significant amount in percentage terms. This tells us that the insiders are very positive on the company’s share price going forward.
Focusing on Profitability
Landec Corp has been undergoing a period of restructuring in order to improve margins and drive profitability whilst positioning itself for long-term sustainable growth and recent results showed signs of progress. While revenue for the quarter was down 9.9% year on year to $137.8 million, (in line with restructuring plans), adjusted EBITDA was $7.6 million versus $6.8 million in Q3 last year. Meanwhile, the balance sheet improved by $14.9 million compared to the prior-year period.
“Lifecore produced another strong quarterly performance which helped propel year-to-date segment revenue growth of 20% and adjusted EBITDA growth of 34% for the fiscal nine-month period ended February 28, 2021,” commented CEO Dr. Albert Bolles.
Looking ahead, management was optimistic about the future. “We believe that the business is extremely well-positioned to benefit from several strong industry trends which include the rise in drug development, a need for capable partners to outsource complex development and manufacturing projects, and growing demand for vial and syringe capacity. Our team is working diligently and creatively to navigate this fluid environment and we remain confident that the steady-state gross margin targets of 11% – 14% that we laid out for the end of fiscal 2021 are still within reach," said Dr. Bolles.
The recent insider trading at Landec Corp suggests that the senior management team is confident that they can execute their recovery plan at the company. We see this insider buying as bullish.