Shares of American Apparel (AMEX: APP) have been poor performers since the company went public through a special-purpose acquisition vehicle, even though the company's same-store sales numbers have been incredibly impressive.The company's shares have rebounded recently following the announcement of a major investment by Lion Capital. Now CEO Dov Charney is making his first trades in his company's stock since it went public and guess what? He's buying: 855,000 shares for $2.67 million, including 460,000 shares purchased on margin.
The stock surged on the filing of the Form 4, but not everyone is buying it. Ben Silverman, director of research at InsiderScore.com, told (subscription required) the Wall Street Journal that the buys may have been more about sending a message of confidence to investors than actually wanting to increase his already majority stake in his company: "Charney is a master when it comes to PR and marketing," he said.
I often find myself taking that position on insider buys but in this case, I think it's probably the real deal. $2.67 million worth of stock is a lot of money -- far more than you normally see when insiders are engaged in "token insider buying" designed to send a bullish signal to the market. The use of margin is also extremely aggressive, and not something you normally see when a CEO just wants to sound an optimistic note.
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Reader Comments (Page 1 of 1)
3-25-2009 @ 10:46PM
munchkyo said...
He is optimistic for a reason and I offer some field research which I have learned to listen to. My 19 year old daughter tells me American Apparel is THE hottest brand around. These were her reasons: moderately priced, fits great, styles go from wild and bizarre to low key and conservative- sort of. One is considered very very hip if you are wearing ATLEAST one of their peices as a part of your outfit A girl doesn't have to worry if she's wearing something from APP. For what it's worth she gave me Apple and Google early early on.
3-26-2009 @ 1:59AM
KrispyKarim said...
munchkyo: Agreed. It baffles me how companies like Crocs footwear were able to float for so long yet the true hot ticket items amongst today's youth, such as American Apparel, still have skeptics in the market.
I'm young enough to know and socially observe what's happening and the latest trend right now (as much as they like to think they're breaking the mold) is the 'hipster' phenomenon. American Apparel is the quintessential hipster brand. This youth culture movement is ever increasing in urban city centers across North America and will hit the suburbs soon once urban areas are saturated and the company is established enough to sell their soul and open in malls.
The hipster trend is still relatively young... it will take off.