There is a core group of insiders within a company that has access to real-time information that allows them to understand how the company is trading and how it may trade in the future. When these key insiders buy company stock, it is worth taking a closer look.
Here, we are going to highlight some interesting insider trades at Verano Holdings Corp (VRNOF:US). Verano Holdings is a vertically integrated cannabis producer. Through its subsidiaries, it cultivates cannabis, before then processing it and distributing the cannabis products to its retail stores where the end products are sold. It’s traded OTC in the US as well as on the Canadian Securities Exchange and currently has a market capitalization of $3.68 billion.
Verano Holdings Corp: Insider Buying
Our data shows that recently, a number of top-level insiders at Verano have purchased stock.
On 9 September, the Founder/CEO at Verano Holdings, George Archos, bought 79,800 VRNOF shares at a price of $12.52. This cost the insider around $1,000,000 and increased his holding by about 40%.
Between 9 September and 13 September, the CIO, Aaron Miles, purchased 14,719 VRNOF shares at an average price of $12.30 per share. These purchases increased his personal stake in the company by about 170%.
On 9 September and 17 September, the Chief Legal Officer, Darren Weiss, purchased a total of 14,466 VRNOF shares at an average price of $11.81. This upped his stake by just below 10%.
On 10 September, the CFO, Brian Ward, purchased 12,510 VRNOF shares at a price of $12.40, spending $150,000 on stock.
Finally, on 13 September, the President, John Tipton, purchased 5,000 VRNOF shares at a price of $12.46 whilst a Director, Richard Smullen, purchased 4,100 VRNOF shares at a price of $12.16.
This trading activity stands out because it is a classic case of ‘cluster buying’ – where multiple insiders are buying simultaneously. This buying pattern is generally very bullish. It tells us that there is a consensus of opinion within the company that the shares are undervalued by the market.
It’s worth noting that several of these insiders have increased their stakes by a significant amount in percentage terms. This gives the insider purchases more weight and tells us that the insiders have a high-level of conviction behind their trades. Our Insider Model views the buying activity as bullish.
Strong Revenue Growth
Verano Holdings’ recent second quarter showed that the company is growing rapidly right now.
For the quarter, the company reported record revenue of $199 million, up 39% on Q1 2021. Excluding the impact of biological assets, net income was $32 million for Q2 versus $8 million in Q1. Adjusted EBITDA for the quarter was $81 million and cash flow from operations came in at $29 million with free cash flow of $4 million. The company acquired aggressively during the quarter to increase its production capacity and it bought more dispensaries to increase its number of retail outlets.
“This was a very strong quarter, particularly in topline revenue growth, which reflects our proven ability to execute in both the retail and wholesale verticals. We executed exceptionally well on our expansion plans in the second quarter, adding 16 dispensaries to our footprint between new doors opened and acquisitions closed, providing an additional runway for growth in core markets such as Arizona, New Jersey, Pennsylvania, Illinois and Florida. Building on this momentum, we anticipate exiting the year with an annual revenue run rate approaching $1.1 billion,” said George Archos, Verano CEO and Founder.
Having assessed these encouraging Q2 results and seen the positive outlook statement, we see the recent cluster of insider trading at Verano Holdings as bullish. It suggests that the key insiders are taking advantage of the recent falls in the share price which they feel is not merited.