Insiders have access to real-time information on their companies and often also have a wealth of experience and knowledge to 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 Medifast Inc (MED:US). Medifast is a nutrition company that specializes in weight loss, weight management, and healthy living products and solutions. Its flagship product is the OPTAVIA plan, which to date, has helped over two million people. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.7 billion.
Medifast Inc: Insider Buying
Our data shows that on November 8, Medifast’s Lead Director Jeff Brown bought 4,000 MED shares at a price of $232.56 per share. This trade cost the insider $930,235 and increased his holding to 34,957 shares.
Mr. Brown – who has served as Lead Director of the company since June 2015 – has an investment management background. Currently, he is the Chief Executive Officer and founding member of Brown Equity Partners, LLC, which provides capital to management teams and companies needing equity capital. He also has a lot of board experience. To date, he has served as Chairman at 12 companies and as a board member at over 50 companies. Given his background, he is likely to have a good understanding of the stock’s intrinsic value.
What stands out about this trade from Mr. Brown is its size. The fact that the insider has spent nearly $1 million on stock, and increased the size of his position by 13%, suggests that he is confident the stock is set to move higher.
Strong Q3 Results
Medifast’s recent third-quarter results were very strong.
For the period, revenue was up 52.3% year on year to $413.4 million while net income increased 21.9% year on year to $42.0 million. Earnings per diluted share came in at $3.56, an increase of 22.3% year on year, and well above the consensus forecast of $3.08.
During the quarter, the company achieved 44.9% growth in active earning OPTAVIA Coaches to a record level of 61,000 while revenue per active earning OPTAVIA Coach increased 7.0% to a new high of $6,773.
"We saw continued strong momentum during the third quarter, reflecting our ongoing success in offering a differentiated and personalized health and wellness program to a growing community of clients across the United States and Asia Pacific," commented Dan Chard, Chairman and CEO. “Our business remains on track to take advantage of the growth opportunity that lies ahead,” he added.
In light of this strong performance, we see the insider buying here as a bullish indicator.