Bbrc International, a major holder of Victoria’s Secret & Co. (VSCO), recently bought over 1.3 million shares in the past month across three transactions. The total buys increased the fund’s stake by 16%, and came to a total cost of over $23 million.
Over the past two years, a company director has also been a small buyer of shares, and the company CFO bought 20,000 shares a year and a half ago for just over $343,000.
Overall, Victoria’s Secret insiders own 12.8% of shares.
The apparel retailer is up about 6% over the past 12 months, in-line with the overall stock market. Victoria’s Secret has had a flat year, with revenues up just 1%, although earnings growth came in a bit better at 4%.
With a profit margin of just 3%, any slowdown in consumer spending could weigh on shares, although they’re still valued at a reasonable 9 times forward earnings.
Action to take: Shares have been cut by more than half from their peak last year, and are now back at their long-term trend line. Contrarian and value investors may like shares here, although Victoria’s Secret does not currently pay a dividend.
For traders, shares may see some kind of rebound after their hefty selloff. The June $25 calls, last trading for about $0.75, could see mid-double-digit returns from a move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
