Equities over the past week and a half have started to give back some of their gains from the large rebound off their mid-June lows. Some profit taking off that rally is understandable given the current amount of economic uncertainty and slowing global growth. Insiders foreshadowed that stocks might be at least fairly valued in July when the ratio of insider selling to insider buying was at its highest ratio so far in 2022. So, where are notable insider purchases taking place now? Here are two off-the-radar stocks seeing considerable insider buying in August.
Let’s start with Nextdoor Holdings Inc. (KIND) , which operates what can be described as a localized version of Facebook. It is a good place to share community news and find recommendations for a good local handyman, plumber or babysitter. Nextdoor monetizes this network through ad placements from local businesses or big corporations that have a physical storefront in a community via its newsfeed, targeted emails and search listings
Nextdoor posted second-quarter results Aug. 10 that missed expectations and it lowered forward guidance. Nextdoor was hardly an outlier in this sub-sector in the second quarter as growth in marketing spending slowed. The bad news sent Nextdoor stock down by more than 20%. However, it has regained a good chunk of those stock losses as one insider has been buying the shares hand over fist since that selloff, accumulating more than $30 million in new shares in the past two weeks. Even with the lowered guidance, Nextdoor should see sales growth in the mid-teens on a percentage basis in fiscal 2022. Also, more than half of Nextdoor’s $1.2 billion market cap is represented by net cash on the company’s balance sheet.
I am also seeing considerable insider buying in Nerdy Inc. (NRDY) , which came public last September at the tail end of the special purpose acquisition company (SPAC) craze. Like most small-caps that debuted on the market via this method, Nerdy’s stock is far below where it came public. Nerdy operates an online learning platform. Its offerings target the K-8, high school, college, graduate schoo, and professional licensing markets and its online sessions cover more than 3,000 topics.
By far Nerdy’s core offering is something called Varsity Tutors. This service matches what Nerdy dubs “Learners” with “Experts” for one-on-one, small-class or large-class instruction and accounts for about 80% of revenue. Customers purchase time in one-hour chunks that can be used in 15-minute increments.
Nerdy should see sales growth of 20% in fiscal 2022 and has a pristine balance sheet. Nerdy CEO Charles Cohn has used the stock’s weakness over the past couple quarters to build his stake in the company. This now totals about 40% of the outstanding float after Cohn bought 5 million shares of Nerdy stock just a few days ago. He purchased a similar amount of shares in May and June using myriad smaller transactions.