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.
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
|Baseline ventures 2009 llc||SAN FRANCISCO||CA||24.41%|
|Benchmark capital partners vi lp||MENLO PARK||CA||16.58%|
|Baillie Gifford & company||EDINBURGH||X0||4.45%|
|Jackson Square Partners llc||SAN FRANCISCO||CA||3.87%|
|Vanguard Group inc||VALLEY FORGE||PA||3.70%|
|Blackrock inc.||NEW YORK||NY||2.58%|
|Steadfast Capital management||NEW YORK||NY||2.21%|
|Contour asset management llc||NEW YORK||NY||1.98%|
|State Street corp||BOSTON||MA||0.95%|
|Park West asset management llc||LARKSPUR||CA||0.94%|
|Price T Rowe associates inc||BALTIMORE||MD||0.93%|
|Lord Abbett & company, llc||JERSEY CITY||NJ||0.91%|
|Macquarie Group ltd||SYDNEY, NSW 2000||C3||0.90%|
|Brown Advisory inc||BALTIMORE||MD||0.87%|
|Miller Value Partners llc||BALTIMORE||MD||0.87%|
Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this blog is meant for educational and informational purposes only. Do your own research before investing and don’t risk more than you can afford to lose. This article expresses my own opinions, and I am not receiving compensation for it (other than from WhaleWisdom). If you buy a book after clicking on one of the above links, I may received an affiliate fee. I do not have a business relationship with any company whose stock is mentioned in this article. I or my associates may hold positions in the stocks discussed.