Watching what CEOs are up to can offer a way to make money.
The latest evidence came in the last days of May, when the top executives at three companies bought up their stock on the open market. All three have scored double-digit percentage gains on their recent purchases.
Big Lots
stock (ticker: BIG) was already deeply in the red for the year to date by that point.
Ziff Davis
(ZD) and
Match Group
(MTCH) shares were turning in lackluster 2023 performances as well.
Big Lots stock dove 25% in the first quarter compared with a 7% rise in the
S&P 500
index. So far in the second quarter, shares of the discount retailer have dropped 32% (TK check) while the index has gained 4%.
Big Lots stock had dropped to a 30-year low on May 26 in response to a disappointing fiscal first-quarter report. Losses were widening, and the company also suspended its quarterly dividend. On a positive note, Big Lots cut $100 million in annual costs in the first quarter through actions including closing distribution centers.
On May 31, Big Lots CEO Bruce Thorn paid $247,503 for 51,000 shares, an average price of $4.85 each. He now owns 670,042 Big Lots shares in a personal account, according to a form he filed with the Securities and Exchange Commission.
“I believe my purchase, and the fact that other executives and directors also recently purchased shares, reflects our collective belief in the long-term growth and value creation potential of Big Lots,” Thorn said in an emailed statement. “No doubt we’re facing some tough times right now, but we’re confident that we’ll overcome them and return to long-term growth and profitability. As I’ve said before, tough times don’t last, tough companies do. And I know Big Lots is damn tough.”
It was a prescient buy. Shares Thorn just purchased have surged 54% through Tuesday’s close. Previous to his latest transaction, the last time he bought shares on the open market was December 2018 when Thorn paid $250,385 for 8,500 shares, an average price of $29.46 each.
Ziff Davis President and CEO Vivek Shah has seen his recently purchased shares gain 12% through Tuesday’s close. He paid $588,557 on May 30 for 10,000 shares of the digital media and internet company, an average price of $58.86. He purchased the stock through trusts that now own 120,000 shares. Ziff Davis was created in 2021 when predecessor company J2 split in two.
“Vivek’s stock purchase demonstrates his belief in the power of the brands in Ziff Davis’ portfolio and their continued ability to deliver authoritative content, reach audiences at scale, and provide tools that offer valuable solutions to digital consumers,” the company said in a statement.
Ziff Davis stock slipped only 1% in the first quarter, but so far in the second it is 15% lower.
The fiscal fourth quarter, reported in February, was mixed. Wedbush analyst Daniel Ives wrote at the time that Ziff Davis “continues to navigate difficult macro headwinds.” He added in a Feb. 17 report that “we continue to believe that Ziff Davis is in a strong position and will remain conservative in this period while focused on driving both organic and inorganic growth as the company looks to start up the merger-and-acquisition engine with about $839.0 million in its treasure chest.” Ives kept an Outperform rating on Ziff Davis stock with a $93 price target.
Ives’s tune changed only slightly after the fiscal first-quarter report. He lowered his target price on Ziff Davis stock to $80 from $93 in a May 10 report, but kept an Outperform rating.
Match Group stock began a monthslong slide after the company offered lighter-than-expected guidance with its Jan. 31 fourth-quarter report. After Match Group’s first-quarter report in early May, J.P. Morgan analyst Cory A. Carpenter cut his target price on shares to $55 from $65, and noted that revenue came in light. Carpenter kept an Overweight rating on Match Group stock.
“[I]t’s clear that some investors need to see Tinder net adds turn positive—or at least start moving meaningfully in that direction—in order to have confidence in the durability of the turnaround,” Carpenter wrote in a report. Tinder is one of the dating-app brands owned by Match Group.
Match Group CEO Bernard Kim paid $1.1 million on May 31 for 31,439 shares, an average price of $34.44 each. He purchased the shares, which have gained 15 through Tuesday’s close, through a family trust that now owns 48,500 shares. Kim last purchased Match Group stock on the open market in August 2022, when he paid $1 million for 16,000 shares, an average price of $63.58.
Match Group didn’t make Kim available, and the company declined to comment for this article.
Match Group stock fell 7% in the first quarter. The shares are up 3.5% so far in the second, reflecting an uptick after Kim’s stock purchase was disclosed.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.
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