In this article, we will take a detailed look at Insiders Are Selling These 10 Retail Stocks. For a quick overview of such stocks, read our article Insiders Are Selling These 5 Retail Stocks.
The strength of the US consumer has kept the market surprised and baffled over the past several months, as the Fed continues to battle inflation that remains sticky amid strong consumer spending. The National Retail Federation recently said in a report that it estimates retail sales to increase in the range of 2.5% and 3.5% in 2024, compared to retail sales growth of 3.6% recorded last year.
Jack Kleinhenz, the chief economist at the NRF, said that consumers have shown “much great resilience than expected” and “it’s hard” to be bearish on the consumer. Most of this strength comes from household savings accumulated during the pandemic days.
But Kleinhenz wondered whether this consumer resilience will continue in the future since inflation begins to bite and savings diminish.
When the pandemic hit, US consumers began spending money on goods instead of experiences and services amid lockdowns. But immediately after the lifting of pandemic-related restrictions, Americans began spending a fortune on experiences. However, Bank of America in its “Consumer Checkpoint” report published in January said that its Winter Spending Survey showed that consumers were planning to decrease spending on dining out, takeout, social events and experiences
Bank of America said it surveyed about 2,000 consumers in the US and found that a whopping 59% of the consumers were planning to start 2024 with caution, with intentions to save money and cut back on spending.
So far this year, retail and consumer stocks remain strong. VanEck Retail ETF (NASDAQ:RTH) is up about 12.2% in the first quarter of 2024, compared to a 10.2% gain for the S&P 500. Investors would be watching Q1’2024 earnings of retailers closely to see how the US consumer is reacting to the changes in inflation and wage growth. Some analysts are also hopeful that rate cuts would bode well for retail stocks.
Back in December, a Wall Street Journal report cited Jay Woods, chief global strategist at Freedom Capital Markets, who said at the time that consumer has been “resilient throughout it all.” Woods said that the overall sentiment was that it’s “OK, we aren’t going to be in a recession. Things are getting little bit better.”
Canaccord’s Tony Dwyer recently talked with CNBC and said that the Federal Reserve would need to get “aggressive” when it comes to rate cuts and should not keep interest rates higher for longer to avoid massive layoffs and recession. Dwyer believes consumer discretionary stocks, along with healthcare and financials, are some of the areas to pile into if you want to benefit from the rate cut environment.
In this backdrop, we decided to take a look at some retail stocks which insiders are selling. For that we first used Insider Monkey’s insider trading stock screener and listed down all retail stocks that saw insider selling activity over the past few weeks. From these companies we picked 10 stocks with the highest insider selling in terms of dollar value. Some top names in the list include Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc (NYSE:WMT) and Amazon.com Inc (NYSE:AMZN). But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. Signet Jewelers Ltd (NYSE:SIG)
Number of Hedge Fund Investors: 25
Signet Jewelers Ltd (NYSE:SIG) is one of the biggest retailers of diamond jewelry. It is one of the retail stocks with recent insider selling, since Signet Jewelers Ltd’s (NYSE:SIG) Chief Digital Innovation Officer Oded Edelman on March 4 sold 7,912 shares of Signet Jewelers Ltd (NYSE:SIG) at $100.87 per share. The executive also sold 7,911 shares of Signet Jewelers Ltd (NYSE:SIG) on February 26 at $105.36 per share. Since February 26 through March 25 the stock has lost about 9% in value.
As of the end of the fourth quarter of 2023, 25 hedge funds out of the 933 funds in Insider Monkey’s database were long Signet Jewelers Ltd (NYSE:SIG). The biggest stake in Signet Jewelers Ltd (NYSE:SIG) is owned by Robert Joseph Caruso’s Select Equity Group which owns a $798 million stake in Signet Jewelers Ltd (NYSE:SIG).
9. Camping World Holdings Inc (NYSE:CWH)
Number of Hedge Fund Investors: 23
Camping World Holdings Inc (NYSE:CWH) sells RVs and related parts. Camping World Holdings Inc’s (NYSE:CWH) CEO Marcus Lemonis dumped 100,000 shares of Camping World Holdings Inc (NYSE:CWH) on March 15 for $25.63 per share. The total dollar value of this insider selling activity was about $2.6 million. Since this transaction the stock has fallen by about 1.54%.
Out of the 933 funds tracked by Insider Monkey, 23 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Camping World Holdings Inc (NYSE:CWH). The biggest hedge fund stakeholder of Camping World Holdings Inc (NYSE:CWH) was David Abrams’ Abrams Capital Management which owns a $134 million stake in Camping World Holdings Inc (NYSE:CWH).
In addition to CWH, Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc (NYSE:WMT) and Amazon.com Inc (NYSE:AMZN) are also seeing insider selling.
8. Floor & Décor Holdings Inc (NYSE:FND)
Number of Hedge Fund Investors: 35
Floor & Décor Holdings Inc (NYSE:FND) is a specialty retail company that sells hard surface flooring and related accessories. David Christopherson, who is the Exec VP/CAO/CLO at Floor & Décor Holdings Inc (NYSE:FND), on February 27 sold 6,850 shares of Floor & Décor Holdings Inc (NYSE:FND) at $118.70 per share. Since then the stock has increased by 5.66%. Floor & Décor Holdings Inc’s (NYSE:FND) CEO Thomas Taylor also dumped 20,000 shares of Floor & Décor Holdings Inc (NYSE:FND) on February 28 at $123.11 a piece.
As of the end of the last quarter of 2023, 35 hedge funds tracked by Insider Monkey had stakes in Floor & Décor Holdings Inc (NYSE:FND). The biggest stake in Floor & Décor Holdings Inc (NYSE:FND) is owned by Warren Buffett’s Berkshire Hathaway which had a $533 million stake in Floor & Décor Holdings Inc (NYSE:FND) heading into 2024.
In addition to FND, Costco Wholesale Corporation (NASDAQ:COST), Walmart Inc (NYSE:WMT) and Amazon.com Inc (NYSE:AMZN) are also seeing insider selling.
SouthernSun SMID Cap Strategy stated the following regarding Floor & Decor Holdings, Inc. (NYSE:FND) in its fourth quarter 2023 investor letter:
“We added Floor & Decor Holdings, Inc. (NYSE:FND) late in the third quarter. FND is a specialty retailer of hard surface flooring operating 207 warehouse format stores across the U.S. The stores are large (avg. ~78k sq ft) and offer a variety of in-stock hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile, installation materials, and adjacent product categories. Customers include professional flooring installers (40% of sales) and homeowners (60%) primarily doing residential repair and remodel projects. FND directly sources its products from over 240 vendors in over 24 countries, enabling it to eliminate middlemen such as agent/ brokers, importers, and distributors. We believe this direct sourcing model gives the company a cost advantage over its competitors and allows it to offer customers the lowest prices in the industry. FND is also able to offer the largest selection of in-stock flooring in the industry because its stores are significantly larger than its competitors. This differentiated value proposition has enabled FND to consistently take market share from both home improvement centers (~30% of the market) and independent specialty retailers (~60% of the market).
The management team, led by Tom Taylor, CEO, has a strong track record of successfully opening more than 170 new stores over the last decade, with plans to eventually reach 500. Stores typically generate 50% cash on cash returns by year 3, meaning each new store should create significant value for shareholders. The balance sheet is strong with Net Debt/ EBITDA at 0.3x (2.7x including lease liabilities), and management has the flexibility to generate additional free cash flow if needed by slowing the pace of store count growth.
In summary, we believe FND will execute its new store strategy over the next decade, resulting in ~5x increase in earnings per share, significant free cash flow available to be distributed to shareholders, and a total shareholder return in the teens.”
7. Macy’s Inc (NYSE:M)
Number of Hedge Fund Investors: 36
Danielle L Kirgan, who is the Chief Transformation Officer at Macy’s Inc (NYSE:M), dumped 15,070 shares of Macy’s Inc (NYSE:M) on March 22 at $20.42 per share.
Paul Griscom, Senior VP/Controller at Macy’s Inc (NYSE:M), also sold 2,969 Macy’s shares on March 22 at $20.43 per share.
Since March 22, Macy’s Inc (NYSE:M) stock has lost about 3% in value
6. Ross Stores Inc (NASDAQ:ROST)
Number of Hedge Fund Investors: 50
Ross Stores Inc (NASDAQ:ROST) is one of the retail stocks seeing recent insider selling activity. Michael J. Hartshorn, the Chief Operating Officer of Ross Stores Inc (NASDAQ:ROST), on March 18 sold 21,056 shares of Ross Stores Inc (NASDAQ:ROST) at $145.14 per share. Since then the stock is up just about 0.2%.
As of the end of the fourth quarter of 2023, 50 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Ross Stores Inc (NASDAQ:ROST). The most significant stake in Ross Stores Inc (NASDAQ:ROST) is owned by D. E. Shaw who has a $291 million stake in Ross Stores Inc (NASDAQ:ROST).
Madison Mid Cap Fund stated the following regarding Ross Stores, Inc. (NASDAQ:ROST) in its fourth quarter 2023 investor letter:
“The top five contributors for the quarter were Gartner, Dollar Tree, Arista Networks, Glacier Bancorp, and Ross Stores, Inc. (NASDAQ:ROST). Finally, Ross Stores put up strong sales results in a difficult apparel/home retail market as it continues to execute well and gain market share.”
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Disclosure. None. Insiders Are Selling These 10 Retail Stocks was initially published on Insider Monkey.
