SGRP

SPAR Group($SGRP) Major Shareholder Reverses Trading Pattern: Buying Signals at Lows After Extended Selling, Acquisition Offer More Than Double Current Price

04/24/2025 02:04

Small-cap SPAR Group Inc ($SGRP) is exhibiting a notable shift in insider trading patterns, with key major shareholders recently turning to purchases after an extended period of significant selling. $SGRP's stock has shown a consistent downward trend over the past 10 months. Trading at approximately $3 in June 2024, the share price has declined to around $1.1 by mid-April 2025, representing a loss of over 60% in value. A temporary rebound occurred in early September 2024, when the price jumped from $1.45 to $2.4, but the downward trend soon resumed. Amid this bearish market, insider transactions at SPAR Group have predominantly been sales. Major shareholder Robert G. Brown and SPAR Business Services Inc (SBS), which he controls, consistently sold shares from June 2024 through January 2025. A particularly significant divestment occurred on October 18, 2024, when Robert Brown sold 162,454 shares (approximately $389,890) in a single transaction. However, as the stock price approached historical lows in April 2025, an interesting shift emerged. Brown purchased 5,000 shares at $1.10 per share on April 15, 2025, followed by an additional 1,000 shares at $1.09 per share a week later on April 21. This marks his first buying signal after a prolonged period of selling behavior. Several business developments provide context for this insider buying reversal. In June 2024, SPAR Group entered into a letter of intent for a going-private transaction with Highwire Capital. The deal proposed an acquisition at $2.50 per share, valuing the company at $58 million. Later, in September 2024, the company sold its Polish business for 185 million rand (approximately $10 million). Examining SPAR Group's financial situation reveals a company with TTM revenue of $228.87 million, net income of $12.25 million, a profit margin of 5.35%, and an impressive ROE of 34.10%. However, recent performance has been lackluster. In Q3 2024, the company reported a loss of 1 cent per share, with revenue declining 43.9% year-over-year to $37.79 million. Additionally, on March 31, 2025, the company disclosed to the SEC a delay in filing its annual report (10-K), potentially indicating issues with financial reporting systems. Robert G. Brown's role is particularly significant. Beyond being a major shareholder, he serves as a controlling officer and director of SPAR Business Services Inc, making him intimately familiar with the company's internal affairs. His trading patterns involve complex structures that often include shares owned by his spouse, Jean Brown, and ownership through pension trusts. His recent buying activity could signal that the stock is significantly undervalued. Currently, $SGRP has a P/E ratio of 2.24, substantially below industry averages. Furthermore, considering that Highwire Capital's acquisition offer ($2.50) is more than double the current share price, insiders may be recognizing this valuation gap. Investors should, however, consider several risk factors. The delayed 10-K filing, poor recent quarterly performance, and uncertainty surrounding the acquisition negotiations could pressure the stock price in the short term. Additionally, basing investment decisions solely on insider transactions carries inherent risks. In conclusion, SPAR Group's insider trading patterns show an intriguing shift. The transition from prolonged selling to recent buying may be interpreted as an insider signal that the stock is undervalued. Nevertheless, investors should carefully monitor the company's business changes, financial condition, and the progress of the going-private plan to make balanced investment decisions.

You can receive notifications when news is published.