The Inside Trade: CEO Marcus Lemonis is back buying beleaguered CWH. He bought $493.5 thousand at $19.74, marking his second insider buy since the stock’s collapse this year. We previously wrote on this, but the jury is still out on whether CWH is a value trap or not.

Here are our bull & bear viewpoints on Camping World.

Bull Case

Insider buying is bullish, particularly with Lemonis’ statement on CNBC’s Cramer show that he had to disgorge $600k of profits to purchase the 41,000 shares he bought between  5-14-18 & 5-17-18 at an average price of $21.89. This was in compliance with the short swing rule since he sold millions worth of stock on March 15, 2018. On the surface, this looks very bullish and like a solid endorsement, but Lemonis is a sharp pencil driven kind of investor and, upon further review, it makes no sense at all. Lemonis paid $600 thousand to buy back 41,000 shares at a much cheaper price. Looks shrewd right?  However, if you do the math, he paid an additional penalty of $14.63 per share ($600k/41,000), so the effective price the CEO paid to repurchase the stock is $36.52 ($21.89+$14.63) which comes out to more than the $35.51. That is what Lemonis first sold at on March 15, 2018. This could be nothing more than window dressing for a guy who owns over half the company. Other insiders have bought though so the “window dressing” thesis does have some holes.

Buying Gander out of bankruptcy looks like a classic Lemonis play and the purchase would make sense to get new Camping World locations up and running quickly at a lower cost than starting from scratch. Perhaps buying Gander aligns favorable demographics to the RV lifestyle but that assertion seems far from certain at the moment.

Lemonis does seem like a savvy investor from what little we know of him

The only really good business is SAM’s Club and perhaps that’s enough

Bear Case

Cyclical business- interest rates are rising, full employment, metal prices rising due to tariffs, etc. It can only get worse from here. The market certainly thinks so as all RV stocks are poor relative performers.

Buying Gander and expanding into sporting goods business is a very risky play in our opinion. Tough business when the company you bought went bankrupt along with Sports Authority, etc. The logic that the RV customer is a natural fit escapes me. That’s like saying RV is to sporting goods as automobiles are to what? 

The management focus issue – Listening to the last earnings call enforces the fact that Lemonis is really running the show at CWH. Perhaps he is spreading himself too thin as a reality TV star, buying multiple business on the CNBC “Profit” show.

The Inside Trade: CEO Warren Kelcy is at it again, buying $44.8 million of his pipeline and midstream oil and gas company at an average price of $22.42. Energy Transfer Equity LP (ETE) has agreed to acquire its affiliated master limited partnership (MLP) Energy Transfer Partner LP (ETP) in an all-stock transaction valued at $27 billion, management for the two companies announced.

Under the agreement, ETP will merge with a wholly-owned subsidiary of ETE in a unit-for-unit exchange, with each ETP unit holder other than ETE and its subsidiaries receiving 1.28 common units of ETE for each ETP common unit owned. The transaction is expected to close in the fourth quarter and provides a premium to the current ETP common unit trading price. This will be immediately accretive for ETE’s distributable cash flow per unit.

In addition to simplifying the organization structure and “further aligning the economic interests within the Energy Transfer Family,” according to management for the Dallas, TX-based companies, the deal would allow the combined partnership to reduce its leverage ratio and reduce the need to issue equity to fund organic growth projects.

The transaction would reduce equity cost of capital by eliminating ETE’s incentive distribution rights in ETP, meaning more cash for the combined partnership.

The Inside Trade: Director Cha bought $18 million of the secondary at $17 per share. Another director bought $ 1 million as well.

This is an unusually large amount of money for an insider to buy in a secondary offering. KalVista is advancing a pipeline of novel, small molecule plasma kallikrein inhibitors through preclinical and clinical development. The organization intends to develop these drug candidates as potential best-in-class treatments for hereditary angioedema (HAE), diabetic macular edema (DME), and other plasma kallikrein associated diseases.