PEB

Pebblebrook Hotel Trust ($PEB) Chairman Buys $1.7M in Shares Over Six Months Amid 43% Stock Plunge

05/07/2025 22:12

Pebblebrook Hotel Trust ($PEB) is drawing attention as its CEO continues aggressive share purchases despite a significant stock price decline. While the company's shares trade near 52-week lows, Chairman Jon Bortz has consistently demonstrated confidence in the company's value through substantial insider buying. Pebblebrook's stock has experienced a steep decline over the past six months. Trading around $14.90 in December 2024, the share price plummeted to $8.43 by early April 2025, losing approximately 43% of its value. Particularly notable was an 18% drop during the first week of April 2025. Despite this downward trend, Chairman Bortz purchased a total of 57,000 shares for approximately $510,000 on May 6th and 7th, at an average price of $8.95 per share. This recent purchase follows Bortz's consistent buying pattern. In June 2024, he acquired 45,000 shares for about $611,000, followed by 96,000 shares for approximately $1,158,000 in August, and 46,000 shares for around $574,000 in November. In March 2025, when the stock fell to the $10-11 range, he purchased an additional 68,000 shares for about $723,000. These consecutive large-scale acquisitions suggest the chairman believes the current stock price significantly undervalues the company's intrinsic worth. Pebblebrook is a Real Estate Investment Trust (REIT) that owns and operates 46 urban and resort lifestyle hotels across the United States, comprising approximately 12,000 guest rooms. The company focuses on enhancing asset value through strategic acquisitions, renovations, and operational efficiencies. However, it faces challenges due to broader difficulties in the lodging industry and macroeconomic uncertainties. The company's recent financial performance presents mixed signals. According to first-quarter results announced on May 1, 2025, Pebblebrook recorded revenue of $320.27 million, a 2% increase year-over-year, but reported a net loss of $32.2 million. This translates to a loss of $0.34 per share, meeting analyst estimates. The company reported room revenues of $196 million, Same Property EBITDA of $62.3 million, and Adjusted Funds From Operations (FFO) of $18.7 million. Brokerage firms like Wells Fargo have maintained a negative market outlook for U.S. lodging REITs since September 2024. They point to pressured consumer spending and cautious revenue growth expectations for the leisure segment, noting that the S&P 500 Hotel & Resort REITs sub-index has declined 11.7% year-to-date. Additionally, Wedbush downgraded ratings for several REITs, including Pebblebrook, to 'underperform' in January 2025. Despite the challenging market environment, Pebblebrook's management maintains confidence in the company's long-term prospects. According to insider trading data, Director Michael Schall also purchased 10,000 shares for approximately $118,700 on March 5, 2025. These multiple insider purchases demonstrate collective management conviction in the company's value. Analysts currently maintain an average price target of $11, suggesting approximately 23% upside potential from current levels. However, earnings estimates have been revised downward by 22.9% over the past few months, and the consensus rating remains 'hold.' Pebblebrook is classified as a small-cap stock with a market capitalization of approximately $1.1 billion. The company's price-to-sales ratio (P/S) of about 0.7 indicates potential undervaluation. As of Q1 2025, Pebblebrook reported cash and liquidity of $218 million, with over $640 million available on an unsecured revolver, suggesting no immediate liquidity concerns. The overall hotel industry faces challenging conditions in the first half of 2025. Inflation concerns, a weakening U.S. dollar, and reduced consumer spending affect the entire sector. However, some analysts project travel demand may recover in the second half of the year, potentially benefiting hotel REITs like Pebblebrook. Investors might interpret Chairman Bortz's consistent and substantial share purchases as a strong signal regarding the company's long-term value. Particularly, this recent acquisition following a sharp stock decline suggests insiders view current price levels as an attractive buying opportunity. Nevertheless, given the ongoing challenges in the hotel industry and broader economic uncertainties, volatility may persist in the short term.

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