Many of the key purchases from this week came from insiders who had also bought in the past, including two directors from the wood pellet manufacturing company, Enviva Inc. (EVA), which we discussed last week:
Enviva (EVA) is a biomass company that manufacturers wood pellets from residual wood left over from harvesting of trees for telephone poles, furniture, etc. The company exports these wood pellets to the United Kingdom, Europe and Japan for use in power plants that can burn these wood pellets instead of using coal.
The company was the the subject of a short report by Blue Orca Capital that you can read here and the company responded by issuing a press release here. I am currently in the process of reading the book Dead Companies Walking by long/short fund manager Scott Fearon. Having seen this drama play out many times before, I agree with Fearon that companies that are doing well can for the most part ignore short sellers and continue executing on their business.
While I cannot comment on Blue Orca’s claim that Enviva is an ESG farce and that they are sourcing the wood for their pellets not just from residual wood but from clear cutting forests, many of the points they make about the company’s financials and dividend bear out. Reviewing the company’s financials, it is clear that the company is losing money, has negative free cash flow, continues to grow its long-term debt and yet chooses to pay a large dividend. Revenue growth was impressive for several years but growth appears to have tapered off in recent quarters.
Continued purchases were also made from insiders of Rocket Companies (RKT), VOXX International Corporation (VOXX), and Dave & Buster’s Entertainment (PLAY), but what stood out to us the most was Director David V. Goeddel purchasing shares in biotech company NGM Biopharmaceuticals (NGM). Dr. Goeddel’s purchase was the sixth-largest insider purchase last week, but we still chose to include it due to the interesting circumstances surrounding the transaction..