Camping World Holdings Inc (NYSE:CWH) has performed well since the stock’s IPO, backed by a strong team of underwriters, and with a history of success. The IPO quiet period for the firm is scheduled to expire on Nov. 1, 2016. As described above, this will allow the underwriters for the offering to conduct analyses, issue reports and make recommendations on Nov. 2, 2016.
Powerful lead underwriters for the IPO include: JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group Inc (NYSE:GS). Additional underwriters include: KayBanc Capital Markets, Credit Suisse Securities, Robert W. Baird & Co., Stephens Inc. and Wells Fargo Securities (NYSE:WFC).
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Business Summary
Camping World Holdings retails recreational vehicles, repair and maintenance services and accessories. It also offers extended service contracts, property and casualty insurance, roadside assistance, travel assistance and vehicle refinancing and financing. The company has an e-commerce site and offers co-branded credit cards. As of March 31, 2016, the company operated a network of 120 RV retail locations and had approximately 7400 employees. The company was founded in 1966 and is headquartered in Lincolnshire, Illinois. Its Chairman and CEO Marcus Lemonis also stars in CNBC’s reality show, The Profit.
In its S-1/A filing, the company notes that it is the only provider of comprehensive products and services for the RV market. Approximately 9 million households in the U.S. own an RV, and Camping World has approximately 3.1 million active customers from that base. The company has two brands: Good Sam and Camping World.
The Good Sam brand offers the widest range of related products and services in the industry, and for the three years ended December 31, 2015, Camping World Holdings had annual retention rates ranging from 65% to 75% for its extended vehicle service contracts, property and casualty insurance, emergency roadside assistance, and membership clubs.
Executive Management Overview
Marcus A. Lemonis is the chief executive officer and the company’s chairman. He has served in those roles since the formation of Camping World Holdings. He has also served as the chief executive officer of CWGS LLC since Feb. 2011; as the chief executive officer of Good Sam Enterprises, LLC since Jan. 2011; as the chief executive officer of Camping World, LLC since Sept. 2006; and as the CEO of FreedomRoads, LLC since May 2003. He holds a Bachelor of Arts from Marquette University.
Thomas F. Wolfe has served as the chief financial officer for Camping World Holdings since the company’s inception. He has served as the chief financial officer of Good Sam, LLC since Jan. 2004; the chief financial officer of CWGS, LLC since Jan. 2011; and served as the executive vice president of operations for Good Sam Enterprises from Sept. 2011 until Feb. 2015. He held a variety of executive-level roles at Good Sam Enterprises, Convenience Management Group, LLC and First City Properties dating back to 1989. He held a variety of different management and staff positions at Deloitte and Touche from 1983 to 1988. Wolfe holds a Bachelor of Science from California Polytechnic State University.
Follow Camping World Holdings Inc. (NYSE:CWH)
Follow Camping World Holdings Inc. (NYSE:CWH)
Financials
The company generated total revenues $3.3 billion in 2015, which was a 21.3 percent five-year CAGR. For the first six months of 2016 that ended on June 30, the company generated total revenues of $1.89 billion. Camping World Holdings reports net income for the first six months of 2016 was $109.8 million. For 2015, its net income was $158.6 million. Camping World derives approximately 93% of its revenue from the sale of RVs, parts, accessories, finance and insurance, while services plans make up the rest.
In its SEC filing, the company stated its intention to use the net proceeds of the IPO to repay $200.4 million of outstanding debt and the rest for general corporate purposes.
IPO Performance Details
Camping World Holdings Inc (NYSE:CWH) went public on 10.6 and raised $250 million through its offer of 11.4 million shares. The company priced at $22, within the initial price range of $21 to $23. It opened higher at $23.75 in its market debut and finished the trading day up 2.3 percent. The stock then dipped 1.2 percent in after-market returns. Shares are now trading just slightly above IPO price at $22.67 (10.25 market close).
Conclusion: Buying Opportunity
Numerous studies have found evidence supporting a temporary boost in stock price in the days surrounding a company’s quiet period expiration. The rationale behind this boost is that, for the first time since a company has gone public, its underwriters are allowed to release reports and recommendations. These reports tend to be positive and result in upward movement for the stock price. Savvy investors, anticipating this uptick, often purchase shares ahead of the event, creating additional momentum.
Our own firm – DRD Investments, LLC – has investigated this phenomenon and found that purchasing shares 5 days prior to the quiet period expiration and selling 2 days afterwards resulted in above-market returns of over 2%. Other factors which were shown to impact return was the industry of the company, stock performance since its IPO, and strength of the underwriters.
Camping World Holdings Inc (NYSE:CWH) has a strong history of profits and growth.
Our research indicates that the expiration of quiet periods often results in a boosts in share prices.
We recommend that investors consider purchasing shares during the remainder of this trading week in advance of the quiet period expiration to take advantage of the likely increase. Investors should sell shares after the release of underwriter reports and recommendations on November 2nd.
Disclosure: I am long shares of CWH.
Note: This article is written by Don Dion. Visit his site at DRD Investments for expert analysis on current and upcoming IPOs.
