Magnolia Capital Fund, a major owner of RE/MAX Holdings (RMAX), recently added 35,390 shares. The buy increased the fund’s stake by 1.7 percent, and came to a total price of just over $650,000.
The fund has been a repeated buyer of shares since June, buying up anywhere from 32,000 to 47,000 shares at a time, even at prices as much as 25 percent higher as where the stock trades today. Going further back, company insiders have generally been sellers of shares in the last two years.
Overall, company insiders own 3.6 percent of shares, and institutions own 107 percent of the float of shares.
The real estate brokerage franchiser is down about 40 percent in the past year, amid a slowdown in housing activity, which has picked up in recent months.
That hasn’t shown up on the company’s earnings yet, with the past year showing an 11 percent increase, and with revenue rising 19 percent thanks to last year’s boom in housing.
Action to take: The company hasn’t been profitable for several quarters, and the housing slowdown is only just now starting to show up on the company’s earnings.
So it’s likely that shares have further downside in the immediate future. Even though the stock yields nearly 5 percent here, shares will likely trend lower first. Investors should stand aside for now.
For traders, there’s likely some more pain in the immediate future. The December $15 puts, last going for about $0.55, offer mid-double-digit returns or better in the coming weeks on a continued drop in shares.
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 of the companies mentioned in this article.