If a company’s largest shareholder is spending millions on that company’s stock, it’s often worth taking a closer look. These investors – which are often deemed to be insiders – tend to have access to the most up-to-date information on business performance and their trades can provide valuable investment insights.
In this report, we are going to highlight some interesting institutional buying at Six Flags Entertainment Corp (SIX:US). Six Flags is an American theme park operator that has operations across the US, Canada, and Mexico. The world’s largest regional theme park operator, it currently has 27 strategically-located parks. It is listed on the New York Stock Exchange and has a market capitalization of $3.4 billion at present.
Six Flags Entertainment Corp: Insider Buying
Our insider transaction data shows that between November 16 and November 22, Six Flags’ largest shareholder, H Partners Management LLC, bought 550,000 SIX shares at an average price of $41.87 per share. This trading activity – which cost the firm over $23 million – increased H Partners’ holding from 7.9 million shares to 8.45 million shares.
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This trading activity is worth highlighting for several reasons. Firstly, H Partners Partner Arik Ruchim currently sits on the board at Six Flags Entertainment. This means the investment management firm is likely to have a good understanding of the group’s revenue trends and prospects.
Secondly, our data shows that H Partners has made some well-timed trades here in the recent past. Early last year, the firm made a number of large purchases when the stock was trading in the low $20s. Since then, the stock has doubled in price, netting the investment manager large profits.
Six Flags’ recent Q3 results showed that the group is making a strong recovery from the pandemic.
For the quarter, revenue was up 405% year on year to $638 million – ahead of the consensus forecast of $587 million. This represented a $17 million increase on the figure posted in Q3 2019. Meanwhile, earnings came in at $1.80 per share – well ahead of the consensus EPS forecast $1.55 per share. During the period, attendance at the company’s parks was approximately 92% of attendance in the same period in 2019.
“We are encouraged by the strong demand we are seeing at all our parks and by our early progress transforming our business, as shown by accelerating attendance trends, higher per capita spending, and a growing Active Pass Base,” said CEO and President Mike Spanos.
On the back of these results, analysts at Credit Suisse raised their price target for Six Flags to $52 from $44 stating that the business is “trending well” and experiencing healthy pricing growth along with the rest of the industry.
In light of these developments, we see the insider buying here as a bullish indicator.