Long-time Wayfair insider bought $13.6M of W on the open market. Growth to continue post-pandemic?

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Michael Kumin has been a director at Wayfair Inc (W) since June of 2011. The e-commerce furniture retailer went public in 2014, with Kumin’s private equity firm Great Hill Partners a major investor. Since then, the Wayfair insider bought shares of W just once on the open market — a $423K purchase at $141.04 on May 15, 2019. He’s been a frequent seller of W over the years. So why did he choose to buy $13.6M of Wayfair stock now?

On Friday after regular market hours, the Wayfair insider filed a Form 4 disclosing a 48,000 share open market purchase at an average price of $283.50. The buying increased Kumin’s in W by 19% from 252,940 to 300,940.

Kumin has been the Managing Partner at Green Hill Partners since 2002. Wayfair is the firm’s lone public holding, according to Green Hill’s most recent 13F filing.

Wayfair Inc (W) 2 year daily chart with 200 day moving average. Chart source: Interactive Brokers

Wayfair has grown quickly into an e-commerce behemoth. The company markets through several websites nearly 18 million items focused on home goods like furniture, decor, decorative accents, housewares, and seasonal selections.

For the fiscal year ended Decembr 31, 2020, Wayfair’s revenues increased 55% to $14.15B. Net income totaled $185M vs a loss of $987M.

Wayfair has benefited from the shop-from-home online retail trend, with the COVID-19 pandemic driving a 2020 spike in revenue.

However, there are skeptics. Wayfair’s short interest was 11.69M shares as of Feb.12. That represents about 6.2 days to cover, based on average daily volume. That’s a fairly elevated level, suggesting many investors are expecting the company to stumble.

The purchase by Wayfair insider Kumin suggests he foresees continued growth for W post-pandemic.

On March 1, Truist analyst Naved Khan upgraded Wayfair to Buy from Hold with a price target of $370, up from $315. The upgrade reflected the analyst’s expectation for improved long-term profitability and a faster/longer growth trajectory vs previously anticipated. Khan stated in a research note he believes the company is set to emerge from the pandemic stronger after solidifying its position as category leader in Home and an improvement in business underpinnings, driving healthy sales growth and improving profitability over an extended period.

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