Lazydays Holdings Inc (LAZY:US)
12-month performance: +258%
Insider activity: Bullish
Insider buying pattern: Large purchase from CEO
Recent news: Strong update
Multiple academic studies on insider transaction activity have found that the most profitable insider purchases occur in small-cap firms. This is due to the fact that this area of the market is less researched. This means there’s more potential for substantial share price gains.
In this report, we are going to flag some interesting insider buying in a US small-cap stock, Lazydays Holdings Inc (LAZY:US). Lazydays operates Recreational Vehicle (RV) dealerships and offers a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. It’s listed on the NASDAQ Capital Market and currently has a market capitalization of $138 million.
Lazydays Holdings: insider buying
What’s caught our attention here is a large purchase from CEO William Murnane. Form 4 filings show that on 26 October, the insider purchased 5,000 shares at a price of $14 per share. The total cost of the transaction was $70,000.
Source: 2iQ Research
This insider purchase looks interesting for a few reasons. Firstly, this is the insider’s largest purchase in several years. It’s much larger than his last few purchases in May of this year. This purchase – which is also at a much higher price than his last few purchases – indicates he is confident the stock is undervalued.
Secondly, Murnane’s last purchase was timed very well. Since he purchased stock in mid-May, Lazydays’ share price has risen more than 250%. This suggests that he has a good feel for near-term developments within the business.
Strong Q3 resultsLazydays Holdings posted a strong set of preliminary third-quarter results on 12 October. For the quarter, revenue was up 36% on Q3 2019 to $216 million. Meanwhile, adjusted EBITDA was up 261% to $19 million. This shattered the previous quarterly record of $14.9 million, set last quarter.
“Year-to-date we believe we have outpaced industry market growth and are gaining significant market share,” said Murnane. “Our growth pipeline continues to be robust. We are evaluating multiple new growth opportunities including both acquisitions and greenfield buildouts,” he added.
Since the 12 October update, the stock has hit a record high after Craig-Hallum raised its price target. Analysts raised their price target to $22, stating that the company is in the early innings of a multi-year growth period through consolidation of the highly-fragmented RV dealer market.
In light of these developments, we see the insider purchase here as a bullish signal.