VAC

Marriott Vacations ($VAC) Director Signals 'Bottom' with $54.8M Buy - Additional Purchase at 30% Discount

11/19/2025 22:37

Christian Asmar, a director at Marriott Vacations Worldwide ($VAC), has captured investor attention with two significant stock purchases totaling $54.8 million this year, sending a strong insider signal amid industry headwinds affecting the vacation ownership sector. Marriott Vacations Worldwide is a $1.6 billion market cap company specializing in the development, marketing, and management of vacation ownership resorts under the Marriott brand. Competing with Hilton Grand Vacations and MGM Resorts, the company operates a diversified revenue model including vacation ownership sales, rental revenues, management and exchange fees, and financing revenues. Asmar's first major purchase occurred over two concentrated days in June 17-18, when he acquired 750,000 shares for approximately $50.8 million at an average price of $67-68 per share. More notably, he made an additional purchase on November 19, buying 84,000 shares at $47.44 per share—over 30% below his June purchase price, suggesting he views current levels as significantly undervalued. This insider buying aligns with the company's compelling valuation metrics. $VAC currently trades at 0.65x book value and 0.39x sales, representing substantial discounts from historical levels. The market capitalization has nearly halved from $3.1 billion in late 2024 to the current $1.6 billion. However, this undervaluation reflects genuine operational challenges. Q3 results showed revenue declining 3.2% year-over-year to $1.26 billion, missing analyst estimates of $1.33 billion by 5.2%. Core vacation ownership sales dropped 7.5%, while cost reimbursements fell 4.7%, reflecting broader industry difficulties as lower-income consumers reduce leisure travel spending. The financial structure presents additional concerns. Total debt of $5.74 billion creates a debt-to-equity ratio of 232.82%, representing significant leverage risk. However, $474 million in cash and a current ratio of 3.89x provide adequate short-term liquidity. Investors should note the company's proactive debt management, issuing $575 million in senior notes at 6.5% in September to refinance 2026 convertible notes. While this improves the debt maturity profile, the high interest burden remains a concern. Positive factors include Q3 EPS of $1.69 beating estimates of $1.64, an attractive dividend yield of 6.78%, and high institutional ownership at 92.6%. However, Mubadala Investment Co's complete divestiture of its $VAC stake provides a contrasting signal to insider buying. Key indicators to monitor include vacation ownership sales recovery, interest coverage stability given high leverage, and consumer confidence trends affecting leisure travel demand. In an optimistic scenario, current undervaluation could present an attractive entry opportunity if insider buying signals a bottom. The current P/E ratio of 10.19x is significantly below the historical 17x level. Conversely, the risk scenario involves continued revenue declines exacerbating debt concerns, particularly as discretionary vacation ownership spending faces pressure during economic downturns. $VAC represents a classic value investment dilemma: strong insider buying signals and attractive valuation metrics alongside structural industry challenges and leverage risks. Investors must carefully weigh this risk-reward profile before making investment decisions in the vacation ownership sector.