Corporate executives and directors tend to have superior information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.
Here, we are going to highlight legal insider trading case at Membership Collective Group (MCG:US). Membership Collective Group is a global lifestyle company that operates a number of private members’ clubs as well as digital channels that are exclusively for members. Its private club portfolio includes Soho House, Soho Works, and The Ned. It’s listed on the New York Stock Exchange and currently has a market capitalization of approximately $735 million.
Insider Buying at Membership Collective Group
Our insider transaction data shows that between November 21 and December 9, two insiders at Membership Collective Group bought stock. Those who bought shares were:
- Director Richard Caring (31,181 shares @ $3.88 per share)
- Director Mark Ein (456,936 shares @ $3.91 per share)
In total, the two insiders spent around $1.91 million on the stock.
We think this insider activity is significant for two reasons.
Firstly, the stock has been weak over the last 12 months and our insider transaction data shows that this is the only insider buying of note during this period. The fact that the insiders have spent nearly $2 million on stock now suggests that they strongly believe the stock is undervalued by the market at these levels.
Secondly, Mr. Ein and Mr. Caring are both well respected businessmen that have made several successful investments in the past. Mr. Ein is the Founder, Chairman and CEO of Capitol Investment Corp, Venturehouse Group, LLC, and Leland Investment Co. Meanwhile, Mr. Caring has been on the board of Soho House since 2008 and has owned the Caprice Group since 2005, a holding company for a number of restaurants. His business interests include private members’ clubs, hotels, and property.
Strong Membership Growth
Membership Collective Group experienced strong membership and revenue growth in Q3 2022.
Total group revenue for the quarter was $266 million. Year over year this represented 48.2% growth. Adjusted EBITDA came in at $20.3 million, compared to $11.4 million in Q3 2021.
Total membership for the period grew to 211,351, up from 193,370 at the end of Q2 and up 46.3% year over year. At the end of the period, the membership waiting list sat at a historic high of 85,000.
“The key demand drivers of our business continue to remain strong, with Soho House members growing almost 30% year-on-year to over 152,000, and revenues for the Group up almost 50% in the quarter. Our expectations for strong revenue growth and membership this year remains unchanged. Given the continued appeal in Soho House, we expect to reach 190,000 Soho House members by the end of 2023,” said Nick Jones, Founder of MCG.
In light of these results, we believe that the recent insider trading case is a bullish development.