NB - Top Insider Picks For March 2023

2023-04-05 13:10:09 ET

Summary

• The month of March had a couple of very interesting insider purchases.
• In this article, we discuss some of the biggest insider purchases by value.
• In addition, we will take a look into 2 companies more in-depth, which we found particularly interesting this month.

Introduction

March was an interesting month for insider purchases. Multiple interesting companies had some insider action. In this series, we will take a look at some of the biggest insider purchases over the last month and we will discuss one or 2 of the biggest purchases in more detail.

Top Insider Buys March 2023

Below you can find a list of the most valuable insider purchases for March.

Now let's take a look at the 10 biggest insider purchases of March 2023.

Defranco James, director of DISH Network Corporation ( DISH ), bought $15.718 million worth of shares. Later that week he bought an additional $8.84M worth of shares. In total, Mr. Defranco increased his stake in the company by 34%.

DISH is an American network company that provides pay-TV services to customers. Its business model is based on providing satellite television services and generating revenue through subscription fees and advertising. The company offers different packages with varying levels of programming, which allows it to appeal to a wide range of customers.

Ra Capital Management, Director and 10% owner of DICE Therapeutics ( DICE ) bought $14.798M worth of shares, increasing the firm's stake by 7%. In addition, they bought another $13.46m worth of shares this month. DICE Therapeutics is a biotechnology company that develops therapies for diseases using a proprietary platform based on DNA-encoded libraries (DELs).

The company has partnerships with pharmaceutical companies such as Biogen ( BIIB ). DICE's technology enables the rapid screening of large numbers of compounds, increasing the likelihood of finding new therapeutic candidates. The company's focus is on developing therapies for diseases with unmet medical needs such as autoimmune diseases, cancer, and rare genetic disorders.

Director Thilo Schroeder of Revolution Medicines ( RVMD ) bought $14.15M worth of shares, increasing his stake by 16%. RVMD is a clinical-stage precision oncology company focused on developing therapies for patients with cancer. The company's business model is based on discovering and developing small molecule inhibitors of specific oncogenic targets to address unmet medical needs.

John Idol, CEO and COB of Capri Holdings Limited ( CPRI ), just acquired $9.98M worth of shares, or a 12% increase in ownership. CAPRI is a global fashion luxury group that designs, markets, and distributes luxury accessories and apparel, the most notable brands in its portfolio include Michael Kors and Versace. The company's business model is based on offering high-quality luxury products that cater to the fashion-conscious consumer, with a focus on brand recognition and marketing.

Top Insider Purchases: FIGS and DISH

FIGS, Inc. ( FIGS )

FIGS is a direct-to-consumer healthcare apparel company that went public two years ago in May 2021. The company was founded in 2013 and had already served more than 1.5 million customers before its initial public offering. FIGS's main appeal is the stretchy material used in their scrubs, which also has anti-odor, anti-wrinkle and anti-moisture capabilities. In addition, their product line includes conventional scrubs, under scrubs, leggings, puffer jackets, and a shoe made in collaboration with New Balance .

FIGS share price sat at around $30 at the close of its first trading day, which has fallen to $6.19 as of writing. This can primarily be prescribed to the risks of this company. FIGS' direct-to-consumer business model is particularly fragile because it operates from just a single distribution center in China. Furthermore, FIGS was most profitable when the COVID-19 pandemic was at its highest; however, now that the world has mostly moved on from this, the company has seen its sales decline.

If we look at FIGS financials, it shows an apparent constant growth in revenue and a highly impressive gross margin above 70% for the first three years of reporting, and only recently falling below 70% after their 2022 earnings ended. The COVID-19 pandemic has likely been a significant beneficial factor for FIGS in terms of sales, as their revenues more than doubled between 2019 and 2020 and grew by almost 60% between 2020 and 2021. However, the YoY growth has since slowed down to 20% growth between 2021 and 2022. Whether the revenue growth will stay subdued at the 20% YoY level or if FIGS can find another gear up.

Their other metrics are by no means in the same realm of growth as their revenues. Their free cash flow was at an all-time high in 2021 at $63.54 million; however, it fell by over $100 million between 2021 and 2022 to $-38.61 million. A market capitalization of $1.029B puts them at an FCF yield of -3.75% in 2022. Their operating margin is also considerably lower in the last two years compared to the high in 2020. As a result, FIGS financials do not look incredibly appetizing to potential investors; however, the fact that their CEO bought for almost $5 million recently could signal good times are ahead.

Furthermore, their ROA was 5.99 in 2022, while their ROE and ROIC were 7.66 and 7.45, respectively, in the same year. These metrics are far from desirable as FIGS is getting very little return on its equity, assets, and investments. As mentioned before, the recent insider purchase could indicate that the business could be in for improvements to its financials.

FIGS Technical Analysis

FIGS recently hit an all-time low of $5.60 and is down almost 90% from its all-time high. The stock has been in a downward channel for the better part of a year and recently broke out of the said channel at the beginning of 2023. The stock sits relatively far from any significant resistances, the closest being the 20 EMA, which is currently $7.57, and the next at $10.20.

The MACD is now flat, showing no apparent signs of solid momentum either downwards or upwards. The RSI is currently 39.50 and thus relatively low, which proves to be an exciting entry for a position if the CEO's insider buy indicates better times ahead for FIGS.

DISH Network Corporation (DISH)

DISH Network Corporation is a publicly traded American company that provides satellite television, audio programming, and interactive television services to residential and commercial customers in the United States. The company was founded in 1980 as EchoStar Communications Corporation, and in 2008 it spun off its technology and equipment rental divisions into a separate company, also called EchoStar Corporation.

Today, DISH Network Corporation operates its satellite television business under the DISH brand, offering various packages that include hundreds of channels and on-demand content. In addition to traditional satellite television, DISH also offers a streaming television service called Sling TV, which allows customers to watch live and on-demand content over the Internet. It is one of the largest pay-TV providers in the United States, with over 12 million subscribers as of 2021.

DISH's financials have remained relatively steady since 2017 but elevated to a new level in 2020 and 2021, which has remained since the pandemic. The gross margin also increased from around 20% to 27%-30% in 2020-2022. DISH's 5-year revenue CAGR is just 3%, which highly reflects the stability in revenue seen in the figure below.

Looking further into DISH's financials, it begins to look more dire. Their free cash flow had turned negative for the first time in the past six years, and their operating margin has declined for the past three years. Typically, these are warning signs when analyzing companies, as DISH recently started bleeding cash; however, the fact that their director purchased more than $15 million last month could provide the support that their fortunes are turning.

With a market capitalization of approximately $49.56B, DISH currently has a FCF yield of -1.25%. As we will discuss in the next section, the fact DISH is currently in negative free cash flow in 2022 may provide a unique entry point for investors interested in opening a position into DISH.

DISH Technical Analysis

Since the beginning of 2022, DISH stock has been in free fall from its $47 price in 2022 to $9.33 at the time of writing. The recent 5-year low of $8.47 is likely to act as a level of support, while the current price is far from any key resistance levels. The next hard resistance level is expected to be $12.54, and it has much room to increase towards this level. Combined with the fact that the RSI is near 33 and the MACD is showing little downward momentum, it is likely that this stock is headed upwards. It also bounced off the downward line of support, further indicating potential upwards movement.

If the stock can break $12.54, $17.15 may be the next critical resistance level. Alternatively, if the stock cannot break the first level of resistance, it could bounce back toward its current price and thus stay in a vertical channel for a while.

Conclusion

Overall, the recent insider buys within FIGS and DISH suggest that the stocks' recent steep declines may be exaggerated. Their subsequent earnings could show signs of businesses in better financial health. Both stocks have been in a recent free fall and are far from crucial resistance levels. These stocks have much room to move upward; however, the looming risk of further downward movement is still possible. If an investor goes purely off the insider purchases, now may be an exciting time to enter DISH or FIGS. We, however, think their financials are not ideal and therefore rate them both as a hold.

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