Bill Gurley’s Stitch Fix insider buying comes as the stock’s short interest soars. The tech dealmaker bought $3.1 mil of SFIX at $20.83

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Bill Gurley’s Stitch Fix insider buying is his first ever as a corporate insider. Gurley bought $3.1 million of Stitch Fix, Inc. (SFIX) shares on the open market, increasing his personal stake by 25% to 755,000 shares. The tech dealmaker’s purchases come as SFIX short interest has surged, reflecting bets that the personal stylings service stock is overvalued and destined to trade lower.

Gurley, a director at Stitch Fix, is a renowned Silicon Valley venture capitalist whose firm Benchmark was an early investor in SFIX and continues to own 16.58%. Stitch Fix’s IPO was in Nov. of 2017 at $15. In an Oct. 15 Form 4, Gurley disclosed a purchase of 150,000 SFIX on Oct. 10 at $20.83.

Gurley also is an investor and board member of Brighter, DogVacay, GrubHub, Linden Lab / secondlife, Nextdoor, OpenTable, Sailthru, Scale Computing, Uber, and Zillow. While he has an extensive history in the public markets, Bill Gurley’s insider buying of SFIX is his first ever as a corporate insider, according to the WhaleWisdom.com data base.

Founded in 2011, Stitch Fix uses a combination of data and stylists to select clothes for subscribers. Customers fill out a survey of their preferences based on size, budget and style. The company then sends personalized apparel and accessories items, which customers can either return or buy at a discount.

On Oct. 1, SFIX reported earnings for the quarter ended Aug. 3 of $7.2 million, or 7 cents per share, compared with $18.3 million, or 18 cents a share, a year ago. That was 3 cents better than analysts were expecting. Revenue climbed 36% to $432.1 million from $318.3 million a year ago.

After gapping lower to $17 after the Q1 report, SFIX shares have since risen 23%, closing Monday at $20.86.

Stitch Fix Inc. (SFIX) daily chart since Nov. 2019 IPO. Source: Interactive Brokers

Baird recently initiated SFIX coverage with an outperform rating and $28 price target.

Just prior to Bill Gurley’s Stitch Fix insider buying disclosure, Baird analyst Mark Altschwagger initiated coverage of Stitch Fix with an Outperform rating and $28 price target. On Oct. 14, Altschwager said the company offers a highly differentiated shopping experience, capable of capturing increased share of a highly fragmented apparel & accessories market. He said the future looks bright and the risk/reward is attractive.

SFIX short interest (shares sold short reflecting bearish investor bets) hit 22.4 million as of Sept. 30 — an all-time high for the stock, and 43% of the stock’s freely trading shares. Skeptics no doubt view Stitch Fix’s price-to-earnings (P/E) ratio of 60 as rich– and Stitch Fix’s forward P/E of 100 as excessive.

Stitch Fix Inc. top holders as of Q3 2019. Source: WhaleWisdom.com

FilerCityState% Ownership
Baseline ventures 2009 llcSAN FRANCISCOCA24.41%
Benchmark capital partners vi lpMENLO PARKCA16.58%
Lake KatrinaCHICAGOIL13.36%
Baillie Gifford & companyEDINBURGHX04.45%
Jackson Square Partners  llcSAN FRANCISCOCA3.87%
Vanguard Group incVALLEY FORGEPA3.70%
Blackrock inc.NEW YORKNY2.58%
Steadfast Capital management NEW YORKNY2.21%
Contour asset management llcNEW YORKNY1.98%
State Street corpBOSTONMA0.95%
Park West asset management llcLARKSPURCA0.94%
Price T Rowe associates incBALTIMOREMD0.93%
Lord Abbett & company, llcJERSEY CITYNJ0.91%
Macquarie Group ltdSYDNEY, NSW 2000C30.90%
Brown Advisory incBALTIMOREMD0.87%
Miller Value Partners  llcBALTIMOREMD0.87%

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