C-Suite Buy of the Week: Tracking Leadership Investments Amid Market Turbulence

Hopefully, when you receive this, I will be elbow-deep in turkey and stuffing.

Thanksgiving is my favorite holiday, and the house will be full of food, festivities, family, and friends—and I will not be obligated to buy gifts for any of them.

I hope you and yours are gathered to celebrate the day as we kick off what will hopefully be a wonderful holiday season.

Over the last few weeks, we have discussed different kinds of C-suite executives buying stocks. As I do every quarter, I checked in with the bosses for some of the best money ideas that can help you, names no one has ever heard of, and brought you some ideas that can help you stack profits towards your long-term goals.

This week, we will switch back to the C-suite of operating businesses and examine which companies receive strong buying interest from top executives.

Business development company Prospect Capital PSEC has had a rough couple of weeks.

To preserve capital, the company slashed the dividend by 25%.

Moody’s knocked its credit rating down a notch, making it the second firm to do so in the last month.

After reporting a disappointing quarter, the firm announced it was exiting the CLO and real estate investing business to focus on middle-market lending.

 Even after a rally last week, the stock is down about 12% this month and 22% year to date.

Over the last few years, the stock has fallen from over $9 a share to under $5.

The CEO, John Barry, did the only thing that made sense under the circumstances. He purchased another $9 million worth of stock, bringing his ownership to almost 17% of the company. While Barry has long been a serial buyer, this was one of his largest purchases this year.

CFO Kristin Van Dask has also been buying shares recently, as has Chief Operating Officer Grier Eliasek.

I confess that I am extremely cautious of BDCs in general and have been very skeptical of Prospect Capital’s outlook, but the heavy buying coming out of the C-Suite must be considered. They have either all lost their minds, especially Mr. Barry, or the stock has enormous rebound potential.

After the dividend cut, the stock still yields over 10% and pays monthly, so you get paid to wait for a fortune reversal.

The hotel industry has been a laggard in the tentative real estate recovery. While revenues and average occupancy rates are up slightly at first glance, most of the gains come from the upper-tier hotels in gateway cities and resort destinations.

Fortunately for Pebblebrook Hotels PEB, that is the market it serves.

The Real Estate Investment Trust owns 46 hotels and resorts, totaling approximately 12,000 guest rooms across 13 urban and resort markets.

While Pebblebrook’s upscale hotels and resorts are bucking the trend with higher occupancy and revenue per room rates, let us not pretend they are knocking the ball out of the park.

Growth has been in the low single digits, and the same is projected for next year.

Hurricanes Debby and Helene did not help, as they negatively impacted Pebblebrook’s southeastern resorts. The stock is down about 20% in 2024 and is less than 50% of the 2022 highs. It also trades at less than half of management’s internal net asset value calculation, which is $26.50 on the low end and $29 a share on the high end of the range.

Chairman and CEO Jon Bortz has decided that enough is enough and has been buying the stock in the open market all year. His most recent purchases, earlier this month, totaled over $300,000.

The hotel industry has been weak, but it has been a superstar compared to the solar industry. Do not get me wrong: renewables are the fastest-growing new source of energy production, and solar is leading the way.

In 2023, renewable energy production grew by over 50%, 75% of which came from new solar energy facilities. The world is projected to add approximately 593 gigawatts of solar capacity by the end of 2024, a 29% increase from the previous year.

Solar stocks have not done as well. The sector has faced challenges, including declining demand, regulatory changes, and increased inventories. These factors have contributed to a sector-wide decline of approximately 25% this year.

Shares of Israel-based SolarEdge Technologies SEDG have faced significant pressure recently, reflecting a broader slowdown in the renewable energy sector and specific challenges tied to inventory issues and weakening demand in key markets like Europe.

SolarEdge is a leader in key solar components like inverters and energy storage. Still, headwinds and concerns about the economy have driven a staggering 86% decline in the stock price so far in 2024. The expectation for next year is not much better, especially with a new administration in the United States that will not favor renewable energy.

Corporate insiders are betting that over time, the industry headwinds will disappear, and the global trend toward renewable energy will help drive the stock back toward the old highs, giving them gains several times their recent purchase price.

The chairman of the board and a member of the board of directors have recently been buying shares in the open market. Chairman More Avery spent more than $2 million a few dollars above the current price to increase his stake in the company.

The stock is in free fall, the industry is out of favor, analysts are bearish, and the internet buzz is negative. Insiders are buying.

 It could be a bumpy ride, but SolarEdge has the potential to give patient, aggressive investors who join the insiders spectacular long-term gains.