HURC

Hurco Companies ($HURC) President Makes $100K 'Bottom Buy' Amid Dividend Cut Aftermath

06/13/2025 19:18

Hurco Companies ($HURC), despite being a small-cap manufacturer with a market capitalization of $94 million, has recently captured investor attention through bold insider buying by management. Particularly noteworthy is President Gregory Volovic's purchase of 7,475 shares at $13.35 per share on June 11th, representing nearly $100,000 investment that signals strong confidence in the company's future. Hurco Companies specializes in manufacturing CNC machine tools and software solutions, serving diverse industries including aerospace, automotive, and medical devices with precision machining equipment. Based in Indiana and established in 1968, the company has built a reputation for technical excellence over five decades in manufacturing, though it has recently faced challenges from market shifts and intensifying competition. The pivotal moment came on June 14, 2024, when the company announced the suspension of its quarterly dividend. While management cited 'enhancing financial flexibility and improving ability to manage market volatility,' this effectively acknowledged cash flow pressures. Following this announcement, shares plummeted from $18.37 and have since declined over 20% to the current $14.74. However, a closer examination of insider trading patterns reveals an intriguing contrast. In July 2024, immediately after the dividend suspension when shares fell to around $15, management aggressively bought shares. CFO Sonja McClelland purchased 1,950 shares, while officers Jonathon Wright and HaiQuynh Jamison also bought hundreds to thousands of shares respectively. Their purchase prices ranged from $15.19 to $15.32, representing strong bottom-fishing activity at that price level. Conversely, institutional investor Polar Asset Management Partners took the opposite approach. From October 2024 through March 2025, they consistently sold shares, particularly in October 2024 when the stock was trading in the $21-22 range, disposing of over 20,000 shares per day. Total sales exceeded $1 million. While this could represent risk management and position sizing by the institution, it also reflects concerns about the company's near-term prospects. The most significant development is President Volovic's recent purchase. His acquisition of 7,475 shares at $13.35 on June 11th is far from a mere gesture. This occurred near the stock's 12-month lows, representing a decision made by someone in the best position to understand the company's true value. The approximately $100,000 investment represents a substantial personal commitment for an executive, indicating genuine conviction rather than symbolic support. Looking at price action, shares rebounded to $21 in late September 2024, coinciding with Polar Asset's major selling period. Since then, the stock has declined consistently to the current $14.74. However, following the president's purchase, shares have shown modest signs of recovery, suggesting potential bottom formation. The manufacturing sector, particularly machine tools, is inherently sensitive to economic cycles. While U.S. manufacturing benefits from long-term trends of reshoring and automation investment, near-term concerns about rising interest rates and economic slowdown have delayed capital investments. Hurco Companies faces these industry headwinds, though its 50+ years of technical expertise and customer relationships provide enduring competitive advantages. From an investment perspective, the key signal is management's consistent buying in the $13-15 range. The president's recent purchase carries particular weight as it represents the assessment of someone with the deepest knowledge of internal operations. The dividend suspension, while initially negative, enables cash preservation and financial health improvements that could prove beneficial long-term. However, continued institutional selling by firms like Polar Asset and broader industry uncertainties remain risk factors. Further price declines cannot be ruled out, necessitating risk management strategies such as dollar-cost averaging or stop-loss orders. Nevertheless, with current prices within management's buying range, the situation warrants consideration from investors willing to accept the associated risks.

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