It’s always interesting to watch what insiders do after their company stock gets whacked. Do they stay on the sidelines or boldly buy stock, perhaps seeing value. The Shyft Group, Inc. (SHYF) recently reported financial results that topped Wall Street’s consensus expectations, but guidance drew boos from investors. (1)
Shares closed on July 26, 2023 at $21.23, and then management told investors full-year earnings would be between $0.33 to $0.76 instead of $0.98 to $1.06. Shyft shares opened at $16.13 the next day and finally settled at $13.43 on the 27th. (2)
In explaining the bad news, management told shareholders, “We previously discussed concerns and a level of uncertainty in the last mile delivery market. After speaking with our customers and listening to their public commentary, there are several factors influencing immediate buying decisions, including continued year-over-year declines in parcel package volume as well as specific customer dynamics regarding fleet strategy.
As a result, — we have seen customers defer and cancel orders, leading to higher dealer inventory levels and reduced OEM chassis production. We experienced the impact of reduced chassis supply late in the second quarter, and we now expect to see more significant reductions in case production levels in the second half of the year.” (3)
The Shyft Group manufactures and assembles specialty vehicles for the commercial vehicle and recreational vehicle industries. It operates in two segments, Fleet Vehicles and Services, and Specialty Vehicles.
The Fleet Vehicles and Services segment manufactures and sells commercial vehicles used in the e-commerce/last mile/parcel delivery, beverage and grocery delivery, laundry and linen, mobile retail, and trades and construction industries. This segment markets its commercial vehicles, including walk-in vans, cutaway vans, and truck bodies under the Aeromaster, Velocity, Trademaster, and Utilivan brands.
The Specialty Vehicles segment engineers and manufactures luxury class A diesel motor home chassis; and manufactures and assembles truck bodies under the Royal Truck Body and DuraMag brands. It also provides final assembly services for Isuzu N-gas and F-series chassis under the Builtmore Contract Manufacturing brand.
After Wall Street smashed the stock, a quarter of directors opened their checkbooks. (4)
- Terrii Pizzuto bought 3,496 shares at $14.31 for $50,028
- Pamela Kermisch acquired 3,239 shares at $15.44 investing $50,010
- Mark Rourke snatched up 7,500 shares at $14.46 spending $108,450
- James Sharman added 7,610 shares at $14.50 for $110,345
That’s what we call cluster buying. It’s when multiple insiders buy at the same time. For Pizzuto, Kermisch and Rourke, it was the first time any of the three went to the open market to buy stock. (5)(6)(7) It’s also the first time since December 2018 any of the industrial company’s insiders bought stock.
OVERALL: It’s been our experience that bad news usually isn’t a one-off event. Usually, it takes a few months to adjust and digest all the bad news. So, investors will need to be patient. In the meantime, the company pays a $0.20 annual dividend (1.28 percent), which helps.
The Shyft Group, Inc. (SHYF) has well-above average volatility and is only appropriate for the most aggressive investors with a time horizon of at least two years, enough time to work through issues and rebound.
1 – https://www.fool.com/investing/2023/07/27/why-shyft-group-stock-is-down-big-today/
2 – https://finance.yahoo.com/quote/SHYF/history?p=SHYF
3 – https://finance.yahoo.com/news/shyft-group-inc-nasdaq-shyf-201638011.html
4 – https://www.secform4.com/insider-trading/743238.htm
5 – https://www.secform4.com/insider-trading/1243748.htm
6 – https://www.secform4.com/insider-trading/1243748.htm
7 – https://www.secform4.com/insider-trading/1699618.htm