Hanesbrands insider buys HBI as analyst sees big upside. Chairman purchases $630K as stock slides.

0
82

Hanesbrands (HBI) Chairman of the Board Ronald Nelson bought 50,000 shares of the apparel company at $12.73 on Nov. 9. The long-time Hanesbrands insider disclosed in a Nov. 10 Form 4 buying $636,600 of HBI.

It was Nelson’s largest insider purchase of HBI since he became a director in 2008. The buying came after HBI disappointed investors with weak guidance following its Q3 earnings report. Nelson was named Chairman of the Board in April of 2019.

Hanesbrands closed at $12.92 on Thursday, down 21% over the last five days.

Nelson’s buying follows a bullish assessment of HBI’s prospects by Evercore ISI analyst Omar Saad on Nov. 7.

Saad cut his 2020 EPS estimate to $1.35 from $1.40 However, he maintained an estimate of $1.55 for 2021 and $1.80 for 2022. Despite the soft guidance, Evercore also maintained its price target of $20. That implies 54% upside from today’s close. According to Saad, that valuation indicates low investor expectations relative to the cash flows he expects the company to generate over the next five years.

Evercore ISI sees Hanesbrands has having a strong “moat” along with 54% upside.

Hanesbrands had a big Q2, with the stock surging to one year highs of $17.74 on October 23. That was a 155% rally from an April 3 low of $6.96.

Hanesbrands (HBI) year-to-date daily chart. Source: Interactive Brokers.

HBI had appreciated significantly since its Q2 report, when the company surprised the street by reporting mask sales of $750M. And while masks look strong going forward, Evercore noted that new CEO Steve Bratspies “turned down the dial” on the long-term PPE opportunity, suggesting Hanesbrands would focus more on its core businesses.

Investors typically view Hanesbrands as an apparel commodity business, according to Evercore. But the firm believes HBI’s “tried-and-true” brands, combined with low-cost manufacturing, gives the company a sizable moat in the apparel industry. A significant purchase by Hanesbrands insider Ronald Nelson suggests smart money agrees with this analysis.

Disclaimer:

This investment blog (the “Blog”) is created and authored by Mark W. Gaffney (the “Content Creator”). The Blog is provided for informational and entertainment purposes only (collectively, the “Blog Service”). The information in the Blog constitutes the Content Creator’s own opinions. None of the information contained in the Blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Content Creator is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the Blog may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

From time to time, the Content Creator or its affiliates may hold positions or other interests in securities mentioned in the Blog. The Content Creator or affiliates may trade for their own account(s) based on the information presented, and may also take positions inconsistent with the views expressed in its messages on the Blog.

The Content Creator may hold licenses with FINRA, the SEC or states securities authorities. These licenses may not be disclosed by the content creator in the Blog.

Investing in the investments discussed in the Blog may be risky and speculative. The companies may have limited operating histories, little available public information. The stocks discussed may be volatile and illiquid. Trading in such securities can result in immediate and substantial losses of the capital invested. You should only invest risk capital not required for other purposes, such as retirement savings, student loans, mortgages or education.

Full Disclaimer.