Insiders have access to real-time information on their companies and often also have a wealth of experience and knowledge that can help them evaluate their firms’ investment potential. If they are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at Wayfair Inc (W:US). Wayfair is an online retailer that sells furniture, decor, housewares, seasonal decor, and other home goods. It is 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 $29.2 billion.
Wayfair Inc: Insider Buying
Our data shows that on November 22, board member Michael Choe bought 10,000 W shares at a price of $258.98 per share. This trade cost the insider around $2.6 million and increased his holding to 105,160 shares.
Mr. Choe – who has served as a board member at Wayfair since May 2020 – has an investment management background. Since 2017, he has served as the CEO and Managing Director of Charlesbank Capital Partners, an investment management firm managing over $8 billion of capital. He joined Harvard Private Capital Group, the predecessor to Charlesbank, in 1997, and was appointed as Managing Director in 2006 and President in 2014. Given his background, he is likely to have a good understanding of Wayfair’s intrinsic value.
What stands out about this trade from Mr. Choe is its size. The fact that the insider has spent $2.6 million on stock – and increased the size of his holding by over 10% – suggests that he is confident the stock is set to move higher.
Online Shopping Strength
Wayfair’s recent Q3 results were a little underwhelming due to the fact that last year’s Q3 results were so strong.
For the quarter, total net revenue came in at $3.1 billion, down 18.7% year over year, while US net revenue came in at $2.6 billion, down 20.8% year over year. Orders delivered for the period amounted to 11,016 compared to 15,758 a year earlier.
“As various geographies reopened post-pandemic, consumers naturally shifted some spend towards travel and entertainment and from e-commerce towards brick and mortar,'' explained CEO and Co-Chairman Niraj Shah. “Demand and interest in the home remains resilient, but it will take a few more quarters for our growth – and e-commerce growth in general – to get back to normal,” he added.
There are signs, however, that online shopping activity could be picking up. In October, US online retail sales jumped 4.0% as Americans started their holiday shopping early. “The consumer is strong and online is doing well," said BTIG analyst Marvin Fong.
In light of this data, we see the insider buying here as a bullish indicator.