Coliseum Capital Management LLC, a major holder of Mastercraft Boat Holdings (MCFT), recently bought over 200,000 shares in two transactions. The buy came to over $4.2 million.
The fund was an active buyer of shares in March, buying $3.25 million. And last September, the fund bought nearly 280,000 shares for just over $6 million. Over that time, there has been only one insider sale, with a director selling less than $140,000 of shares.
In total, Mastercraft insiders own 3.6% of shares, but institutional investors own nearly all of the rest of the float.
Mastercraft shares have dropped by 26% in the past year. Operationally, the recreational powerboat manufacturer has done even worse, with revenues off by 37% and earnings have collapsed by 70%.
The big drop in shares has taken the stock to 6 times earnings, and the company trades at about two-thirds its price to sales.
Action to take: Mastercraft shares look oversold at current levels, and the company’s valuation could mean a trend higher in the coming months.
As a smaller cap company, investors should start with a smaller position to reflect the higher speculative risk. Plus, Mastercraft does not pay a dividend.
For traders, the September $25 calls, last trading for about $1.30, could see mid-to-high double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.