The K-Shaped Economy – Insider Weekends

Introduction

We remain in the depths of the quiet period at the moment, the time around earnings season when insider activity becomes muted. Both insider buying and selling in aggregate declined sharply this week, but nevertheless, there were still a few companies that caught our eye from the list of the top five insider purchases and sales. We ran into a similar situation in last week’s Insider Weekends article, and ended up writing about three companies (Pampa Energia, PepsiCo, and Sharplink) independently. However, this week, I’d like to write about two businesses that caught our eye from the list of top five insider sales: Wayfair (W) and Lindblad Expeditions (LIND).

On paper, these two companies couldn’t be more different. Lindblad Expeditions is an expedition travel company that partners with National Geographic to host cruises and trips to exotic locations such as Antarctica, the Galápagos Islands, and the Amazon. On the other hand, Wayfair is an e-commerce platform that sells furniture and home goods online, connecting buyers with thousands of global suppliers and third-party manufacturers who drop-ship items directly from their warehouses. However, looking at these two businesses reminded us of a topic that is currently top of mind for investors and economists alike: the K-shaped economy.

As we’ll explore throughout this article, the two companies (and their relative performance over the last few years) certainly exemplify the concept of an economy moving in two drastically different directions.

The K-Shaped Economy

The term “K-shaped economy” first emerged a few weeks into the COVID-19 pandemic, as economists were trying to hypothesize how a recovery might take place: a V-shaped recovery (a sharp drop followed by a fast rebound), a U-shaped one (a slower rebound), or, worse, an L-shaped one (a recession followed by long stagnation). However, Peter Atwater, an economist and adjunct professor at William & Mary, noticed a divergence in the confidence of white- and blue-collar workers in the wake of the pandemic. Those who had the freedom to work from home felt much better compared to hospital workers, supermarket clerks, and factory workers who were required to return back to work. It was this difference in sentiment that led him to the concept of a K-shaped economy.

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