Capital Southwest Corporation (CSWC), Embattled Drug Maker Valeant and Struggling Boutique Operator Francesca’s Register Insider Buying

Boutique Operator Registers Insider Buying Amid Leadership Overhaul

Francesca’s Holdings Corp (NASDAQ:FRAN) has seen two executives buy shares thus far in 2016, both of whom bought shares earlier this month. To start with, Laurie Hummel, Executive Vice President and Chief Merchandising Officer, snatched up 9,500 shares on Friday for $10.46 each. After the recent purchase, Ms. Hummel currently owns 27,332 shares. On June 13, interim Chairman, President and CEO Richard W. Kunes bought a new stake of 20,000 shares at prices varying from $10.52 to $10.66 per share.

The specialty retailer operating a nationwide-chain of boutiques has seen its shares plunge by 41% since the start of 2016. The decline was mostly related to the resignation of Michael W. Barnes from his positions as Chairman, President and CEO in mid-May, after being at the helm of the company for less than two years. Immediately following the resignation announcement, analysts at Jefferies downgraded Francesca’s Holdings Corp (NASDAQ:FRAN) to “Hold” from “Buy” and slashed their price target to $11 from $22, saying that “we continue to believe that fundamentals may not be as powerful under a lack of stable leadership”. Francesca’s Holdings, which operates 637 boutiques in 48 states across the nation that sell apparel, jewelry, accessories, and other products, reported net sales of $106.11 million for the 13 weeks that ended April 30, up from $95.01 million reported a year ago. The increase was mainly driven by a 2% increase in comparable sales due to a higher number of transactions at the boutique and on-line, as well as the opening of 48 new boutiques.

The hedge fund sentiment towards the boutique operator increased during the January-March quarter, as the number of funds from our database invested in the company jumped to 26 from 18. Mariko Gordon’s Daruma Asset Management reported owning 2.93 million shares of Francesca’s Holdings Corp (NASDAQ:FRAN) in its latest 13F filing.

Business Development Company Has Four Insiders Buy Shares

Capital Southwest Corporation (NASDAQ:CSWC) registered a cluster of insider buying last week, which involved four different insiders. To start with, Board member Thomas D. Morgan purchased 1,000 shares on Friday at $14.03 apiece, lifting his overall holding to 4,395 shares. Douglas M. Kelley, Senior Vice President and Managing Director, snapped up 1,775 shares on the same day for $13.92 each. Following the recent purchase, Mr. Kelley currently holds an ownership stake of 44,803 shares. Michael Scott Sarner, Chief Financial Officer, Chief Compliance Officer and Secretary, bought 4,986 shares on Thursday at a price tag of $14.12 per share, which boosted his stake to 30,786 shares. Last but certainly not least, Director David R. Brooks purchased 4,000 shares on Friday for exactly $14.00 each, increasing his ownership to 6,600 shares.

The shares of the specialty lending company that provides financing to U.S. middle market companies are down a little less than 1% year-to-date. In late September 2015, Capital Southwest Corporation (NASDAQ:CSWC) completed the separation of its former industrial and lending businesses into two publicly traded companies by spinning-off CSW Industrials Inc. (NASDAQ:CSWI). The spun-off company operates Capital Southwest’s former industrial products, coatings, sealants and adhesives and specialty chemical businesses.

There were eight asset managers tracked by Insider Monkey with equity investments in the business development company at the end of March, as compared to 11 registered at the end of December. Those eight managers hoarded up nearly 15% of the BDC’s outstanding common stock. Michael M. Rothenberg’s Moab Capital Partners had 1.66 million shares of Capital Southwest Corporation (NASDAQ:CSWC) in its portfolio at the end of March.

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