Dick's Shares Outperform Following Barron's Story On 'Bullish' Insider Buys

Shares of Dick's Sporting Goods DKS are up 1.15 percent following a Barron's story on “bullish” insider buys.

Insiders Throw ”Hail Mary Pass”

Barron's author Grace Williams wrote, “Three Dick's Sporting Goods insiders including the top executive threw a Hail Mary pass and bought 140,300 shares of the retailer for $5,969,420, an average of $42.55 each, on May 28 as shares dove to a two-year low” on Friday.

The company's stock took an 18 percent hit following management's report of a weak first quarter and disappointing guidance on May 20. Shares continued to fall, setting a new 52 week low at $42.33 the following day.

Breakdown of Buys

Edward W. Stack, Chairman and CEO of Dick's, bought 115,000 shares at approximately $42.5587. This $4,894,250 purchase increased Stack's stake of the company from 11.4 percent to 11.5 percent.

Director Larry Stone bought 23,000 shares through a trust. Stone indirectly holds 47,135 shares and directly holds 4,329 shares.

Chief Financial Officer Andre Hawaux increased his direct holdings to a total of 58,653, after buying 2,300 shares.

Stock Lows = Buying Opportunity

In an interview with Barron's, InsiderInsights.com Director of Research Jonathan Moreland commented, “Larry Stone's purchase was the one that put it over the edge for us.”

Moreland continued, “He has not been a huge purchaser of the stock. The gut feeling is that it's not going to be all good from here, but it's a possibility that there has been an overreaction to the obviously weather-affected quarter.”

Michael Baron, a VP and analyst from Baron Capital Management, sees a buying opportunity in the drop in share prices. In a Barron's article, Baron remarked, “What we're seeing right now is that people who want to be owners of a best-in-breed growth retailer are taking advantage of the very weak price and very attractive valuation.

“We see $4 earning power and in a few years, nobody is going to remember what happened in the first quarter of 2014 because golf and hunting sales were weak.”

Barons Capital Management owns Dicks in its funds.