When it comes to investing in publicly listed companies, there is no stronger show of confidence for shareholders than when Executive management buys shares on-market. It’s why investors should be taking note of one ASX-listed small cap CEO having bought $750k on-market in the past 2 years – a genuine indicator that they think the stock is undervalued.
For eCommerce company Harris Technology (ASX: HT8), CEO Garrison Huang continues to accumulate his holdings while the sector is undergoing a downturn. Being a pure play online retailer, Harris Technology underwent explosive growth since the start of the pandemic as online retail became the primary medium for shopping. This resulted in Harris Technology’s annual sales rising from $9m (pre-pandemic) to $13.6m in FY20 and $41.8m in FY21.
And every step of the way, Huang has been buying HT8 shares on-market, backing the Company he has turned around when they underwent an ambitious transformation by shutting down retail storefronts in 2018 to become a pure play online tech retailer.
In Harris Technologies’ latest ‘Change of Director Interest’ notice on Wednesday, the CEO acquired $70,000 of HT8 shares at $0.032 per share to support the stock amid the market bloodbath that has seen the All Ordinaries fall 11.6% in the past five days. With Huang’s confidence in Harris Technology’s vision, HT8 shares fell just 3.4% over that same period.
While Harris Technology shares have regressed from their highs of $0.20 at the peak of the pandemic, Huang’s confidence in Harris Technology’s advanced eCommerce infrastructure have not been dampened with the CEO spending more than $750k of his own money in the past two years buying HT8 shares on-market.
With the sharp rise in online sales that Harris Technology was revelling in, it was only a matter of time until traditional retailers clawed back into the game through increased advertising. Meanwhile, Harris Technology have benefited from the tailwind of increased advertising spend by all the major marketplaces, rather than their own advertising. Listing thousands of products across Australia’s largest online marketplaces that include Amazon, eBay, Kogan and Catch where their large seller profiles ensure Harris Technology products are featured prominently.
In many instances, customers assume they are buying their tech products directly from Amazon when in fact they are buying from Harris Technology which has 100% positive feedback from more than 4,000 customer reviews in the past 12 months.
As these marketplace operators slug it out against traditional retailers, Harris Technology has been consolidating its business and buying power with facility upgrades, category expansions and a transition towards higher-margin products.
Having reported $41.2m in sales for the 9 months to 31 March 2022, Harris Technology will comfortably exceed its FY21 revenue ($41.8m). If Huang’s $750k worth of confidence is anything to go by, the Company’s focus on higher margin products is setting a platform for greater profit in the years to come after delivering $1.75m NPAT in FY21.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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