It’s not a stretch to say that insiders are some of the most informed participants in the market. Quite simply, they are the smart money. When they’re buying large amounts of company stock, investors should take a closer look.
In this report, we are going to highlight a large insider purchase at Wayfair Inc (W:US). Wayfair is an online retailer that sells furniture, decor, housewares, seasonal decor, and other home goods. It is currently one of the world’s largest online destinations for home goods. The company is listed on the New York Stock Exchange and currently has a market capitalization of $30.6 billion.
Wayfair Inc: Insider Buying
Our data shows that on 4 March, board member Michael Kumin – who has served on Wayfair’s board since June 2011 – purchased 48,000 W shares at a price of $283.50 per share through an entity he owns, TOF Capital. This purchase cost the insider approximately $13.6 million.
This purchase is worth highlighting for a couple of reasons. Firstly, it is a large purchase, both in nominal and relative terms. Our records show that this purchase has increased the size of the insider’s holding from 8,000 shares to 56,000 shares. This suggests Kumin is very confident in the outlook for the stock.
Secondly, Mr. Kumin is a managing partner at private equity firm Great Hill Partners – an early investor in Wayfair. Given that Great Hill Partners has worked with Wayfair since 2009, Kumin is likely to have a very good understanding of the company and its growth prospects.
Strong Q4 Results
Wayfair posted a strong set of fourth-quarter results in late February. For the quarter, revenue amounted to $3.7 billion, up 44.9% year over year, with international net revenue up 70.7% year over. Meanwhile, adjusted EBITDA was $263.2 million versus an adjusted EBITDA loss of $180.2 million in the prior year. Free cash flow was significantly higher than Q4 2019 at $128.3 million versus -$158.5 million. For the full-year, total net revenue came in at $14.1 billion, up 55% year on year.
“Online shopping behavior is becoming increasingly entrenched and consumer demand for the home category remains strong. Wayfair is capitalizing on these tailwinds by delivering a truly differentiated experience for both customers and suppliers. In the process, we are cementing our position as the leading platform for the Home, reinforcing our brand to tens of millions of customers, and developing innovative and value-added solutions for thousands of our suppliers,” said Niraj Shah, Wayfair’s CEO, Co-Founder and Co-Chairman.
“As we look beyond the pandemic period, we are confident that our long-term orientation and years of investments should translate to compounding share gains and increasing profitability in a rapidly growing e-commerce market,” he added.
In light of this confident tone from management, we see the insider buying here as bullish.