Menu
Considering we are in a quiet period related to earnings, I figured insider buying will be muted and hence it will not generate any interesting purchases worth exploring. I was very much mistaken. Beyond the usual suspects like BRT Apartments (BRT) that we wrote about last week, there were three other companies that piqued by interest.
The first was the furniture company Lovesac Company (LOVE), which until about a year ago was growing rapidly, trades at a low valuation and has seen multiple insider purchases by the same director in recent months. I spotted some of their modular and “StealthTech” furniture at my local Costco a few weeks ago. The rapid deceleration of revenue growth and low profit margin gave me pause.
The second company is a favorite compounder Fastenal Co. (FAST) of many investors and I have seen numerous write-ups of the company over the years. The company always traded at a premium valuation and my reluctance not to pay up for the company was a mistake. The stock is up 23% over the last year and has nearly doubled over the last five years. The company has a unique business model with over 100,000 vending machines installed that instead of dispensing soda and snacks, dispense fasteners, screws and a whole lot more directly at industrial, construction and even gold mining sites.
Once again my concern is rapid deceleration of revenue growth where revenue has only increased by low single digits in each of the last three quarters. A combination of low growth and high valuation did not deter a director from purchasing shares on the open market.
I almost dismissed the third company just by looking at the name, the low $388 million market cap and the fact that it was a REIT focused on the commercial/office properties segment. However I am glad I took a closer look to understand why Andrew Spodek, founder and CEO of Postal Realty Trust (PSTL) was buying shares.