Insider transaction activity can help investors generate alpha. Insiders are some of the most informed participants in the market meaning their buying and selling activity can provide valuable trading signals.
In this report, we are going to highlight some interesting insider buying at Topgolf Callaway Brands Corp (MODG:US). Topgolf Callaway Brands is a golf and entertainment company. Headquartered in California, it manufactures and sells golf clubs and equipment under the Callaway brand while offering entertainment services through its Topgolf division. The company is listed on the New York Stock Exchange and currently has a market cap of around $3.61 billion.
Buys From Multiple Insiders
Our insider transaction data shows that in the last five weeks or so, there have been six purchases by four insiders here. The trades are listed below in chronological order:
May 11 – CFO Brian Lynch purchased 10,000 shares @ $17.79 per share
May 12 – President and CEO Oliver Brewer III purchased 5,000 shares @ $17.12 per share
May 22 – Executive VP Rebecca Fine purchased 7,000 shares @ $16.23 per share
May 26 – President and CEO Oliver Brewer III purchased 8,600 shares @ $17.18 per share
May 31 – President and CEO Oliver Brewer III purchased 6,400 shares @ $17.06 per share
June 8 – Board member Adebayo Ogunlesi purchased 100,000 shares @ $19.45 per share
Combined, the insiders spent around $2.58 million on stock.
It’s the large purchase from Mr. Ogunlesi that stands out here as he has a background in investment management. Currently, he is Chairman and Managing Partner of Global Infrastructure Management, LLC, a private equity firm with over $15 billion in assets under management. Earlier in his career, he spent 23 years at Credit Suisse where he held several senior positions, including Executive Vice Chairman and Global Head of Investment Banking. Given his background, he is likely to have a good idea of the company’s intrinsic value.
Topgolf Callaway Brands’ recent Q1 results were better than expected.
For the period, net revenue came in at $1.17 billion, up 12.2% year on year and ahead of the forecast of $1.14 billion. Meanwhile, adjusted earnings per share amounted to 17 cents versus the consensus forecast of 16 cents.
Looking ahead, the company said that it remains on track to be free cash flow positive by the end of the year. Additionally, it increased the midpoint of its full-year revenue and adjusted EBITDA guidance.
"Our first quarter results exceeded expectations, driven primarily by the impressive performance of our new and existing Topgolf venues and Paradym, our latest innovation in golf club design," commented Mr. Brewer. "The modern golf consumer remains engaged and our brands continue to be well-positioned to benefit from the sustained momentum in off-course and on-course golf,” he added.
In light of this earnings beat and the adjustment to guidance, we see the insider buying here as a bullish development.