By Michael Brush
Results were hurt by cost management and supply chain issues, and weakness in its Nordstrom Rack off-price division, where investors had hoped for continued robust growth. On the bright side, the company has a strong brand and balance sheet, and a management team that can recover from the fumble, says Kaser of the Cabot Turnaround Letter. Director Bradley Tilden agrees. He just bought $468,000 worth of stock at $21.27, a big enough purchase to serve as a valid insider signal for me.
Sector : Software
Market cap : $30.5 billion
The damage : Down 30% YTD and 51% from 2021 high
It’s pretty tough to do anything in business these days without running into DocuSign /zigman2/quotes/205992027/composite DOCU -6.83% agreements that you sign and transmit electronically.
Despite DocuSign’s dominance in this space, its stock blew up in early December when the company posted 28% growth in billings, well below 34% guidance. The problem: DocuSign’s business got a great boost from the pandemic, which is now wearing off.
Still, there is plenty of room for growth ahead. Few people want to shift back to hard-copy agreements. CEO Dan Springer estimates the market is worth $50 billion a year, and he says DocuSign is still in the early days of taking share since digital transformation “remains a high priority” for organizations worldwide. “Even as the pandemic subsides and people begin to return to the office, they are not returning to paper,” he says.
Springer backs up his bullish commentary with a huge $5 million purchase, up to $149 a share. To me, that makes his bullish claims more believable.
Sector : Software
Market cap : $3.8 billion
The damage : Down 54% YTD and 61% from 2021 high
Everbridge /zigman2/quotes/202832262/composite EVBG -2.41% offers software that helps governments, schools and private companies including Goldman Sachs /zigman2/quotes/209237603/composite GS -0.43% , Microsoft /zigman2/quotes/207732364/composite MSFT -3.17% and Starbucks /zigman2/quotes/207508890/composite SBUX -1.73% deal with emergencies like active shooters, terrorist attacks or severe weather. The software helps managers communicate with employees, assess risks, locate responders and track progress on response plans.
Everbridge beat third-quarter estimates in early November with 36% sales growth, and it raised guidance. Its customer count grew 10%. But investors weren’t impressed. The stock gapped down on the news and kept falling. Then in early December the company announced CEO David Meredith is resigning, and the stock hit the skids again. Not even celebrity PR rep William Shatner could combat the Vulcan death grip of negativity.
But insiders are coming to the rescue. A cluster of directors recently bought $1.5 million worth of stock at prices up to $67. The cluster buy and purchase size are two clues I look for to tell me that insider buying is more than just fluff. Insiders challenging extreme market negativity is also a nice dynamic. In my experience, insiders often win these standoffs.
Sector : Cloud services
Market cap : $3.4 billion
The damage : Down 42% YTD and 57% from 2021 high
HealthEquity /zigman2/quotes/210521638/composite HQY -2.44% offers cloud-based platforms that help customers navigate the thickets of health insurance and manage health savings accounts (HSAs) and other “consumer-directed benefits” like flexible spending accounts.
HealthEquity’s stock was already down for the year in early December when it announced a slight decline in third-quarter revenue, so shares got hit even harder. The culprit: Weak sales in consumer-directed benefits. But HSA membership grew 14% to 6.2 million, and HSA assets grew 32% to $16.4 billion. In short, the quarter wasn’t all bad, and the HSA trend suggests the long-term story is still intact, says Baird analyst Mark S. Marcon, who has a $53 price target on the name.
Insiders agree. A cluster of three bought $1.7 million worth of stock on the weakness in December at around $40 to $43 a share. Since 2010, HealthEquity has grown its HSA market share to 17% from 4%, which also suggests long-term momentum in the business.
Michael Brush is a columnist for MarketWatch. At the time of publication, Brush owned DOCU. Brush is editor of the stock newsletter Brush Up on Stocks. Follow him on Twitter @mbrushstocks.