Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger companies, and therefore offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small, US-listed company, CalAmp Corp (CAMP:US). CalAmp is a technology company that offers solutions designed to streamline complex IoT deployments and bring intelligence to the edge. Via its software applications, scalable cloud services, and intelligent devices, it collects and assesses business-critical data from mobile assets, cargo, companies, cities, and people. The company is listed on the Nasdaq and currently has a market cap of $154.5 million.
Insider buying at CalAmp
Our data shows that there have been two notable insider purchases at CalAmp recently. Between September 27 and 30, President and CEO Jeff Gardner bought 20,000 shares at a price of $4.17 per share. Another insider, board member Wes Cummins bought 505,811 shares at an average price of $4.14 per share for funds where he is an investment manager. Combined, the two insiders bought around $2.17 million worth of CalAmp stock.
Both of these insiders have significant experience in the technology industry.
Mr. Gardner – who was appointed President and CEO in July 2020 – has served on the boards of Qorvo, RF Micro Devices, and Windstream Holdings. Previously, he served as the President and CEO of Brinks Home Security and CFO of Alltel Corp.
Mr. Cummins – who was appointed as a director of CalAmp in June 2022 – currently serves as President of B. Riley Asset Management. He also serves as Chief Executive Officer and Chairman of Applied Blockchain. Previously, Mr. Cummins was CEO of 272 Capital, an investment firm focused primarily on technology investments. He sold 272 Capital to B. Riley Financial in 2021.
Given their experience in the tech industry, the insiders are likely to have a good understanding of CalAmp’s prospects.
Improvements in supply chain
CalAmp recently posted solid Q2 results thanks to improvements in the supply chain, which enabled it to accelerate customer conversions to recurring subscription contracts and fulfill more orders.
While total revenue of $72.83 million was down 8% year on year, it was up 13% on a sequential basis, and ahead of analysts’ estimates ($69.27 million). Within this, Software and Subscription Services (S&SS) revenue was a record $44.5 million, or 61% of total revenue, compared to $39.6 million in the prior quarter.
Adjusted EBITDA was $4.8 million, or 7% of revenue, compared to adjusted EBITDA of $1.9 million, or 3% of revenue in the prior quarter.
Encouragingly, at the end of the period, total S&SS subscribers were 1.3 million, a 9% sequential increase and a 32% increase year over year, showing that the group is making progress in terms of converting customers to recurring SaaS contracts.
In light of these results, we see the insider buying here as a bullish indicator.