SPRU

Spruce Power ($SPRU) Directors' $2.37 Cluster Buying Up 110%—Q3 Loss Improved 98% Validating Turnaround Bet

01/19/2026 17:27

Spruce Power ($SPRU) surged 288% from September to November 2025, capturing small-cap investor attention as shares rocketed from $1.54 to $5.98 before settling at $4.96 as of December 17, 2025. What makes this rally particularly intriguing is that seven company directors made concentrated purchases between late November and early December 2024—ten months before the surge—at prices ranging from $2.37 to $2.82. At current levels, those insiders are sitting on gains of 76% to 110%. Spruce Power owns and operates approximately 85,000 residential solar assets across 18 U.S. states. Founded in 2009 and headquartered in Denver, the company isn't simply a solar installer—it operates the Spruce PRO servicing platform providing billing, collections, and customer support for roughly 60,000 third-party systems in addition to its owned assets. This business model offers relative insulation from solar policy volatility, generating stable cash flows from already-installed systems. The insider buying wave between November 27 and December 13, 2024 demonstrated strong management conviction. Director Kevin Griffin kicked off the cluster with 10,000 shares at $2.37. Director Christopher Hayes made two consecutive purchases on November 27 and December 2, totaling 13,267 shares. The largest single purchase came from Director John Miller, who bought 20,000 shares ($52,400) on December 2. Director Eric Tech made three consecutive purchases on December 2, 6, and 13, accumulating 8,000 shares and showing particularly strong conviction. The seven directors invested a combined $145,000 during a period when the company was approaching improved quarterly results and major contract signings. What they saw became clear in the Q3 2025 results released November 11, 2025. Q3 revenue reached $30.7 million, up 44% year-over-year, while operating EBITDA surged 48% to $26.2 million. The most impressive transformation came in net loss: from $53.6 million in Q3 2024 to just $0.9 million in Q3 2025—a 98% improvement essentially reaching breakeven. Operating cash flow jumped 104% year-over-year to $20.2 million (adjusted basis), while cash holdings reached $98.8 million ($5.44 per share). Operating expenses also improved with O&M costs down 53% and SG&A down 4%, accelerating the path to profitability. The immediate catalyst for the stock surge was an August 8, 2025 announcement of a multi-year agreement to sell Solar Renewable Energy Credits (SRECs) in New Jersey. This contract guarantees $10 million in fully hedged revenue through 2029, and shares jumped 35% on the news. On September 26, the company won a competitive bid to expand backup servicing into Puerto Rico, cementing its position as a comprehensive solar portfolio servicer. The company also acquired the NJR Clean Energy Ventures portfolio in November 2024 and signed an ADT Spruce PRO service agreement in December, maintaining growth momentum. However, Director Mcbane Nagy's December 15, 2025 sale of 40,000 shares at $5.06 per share (approximately $202,000) deserves attention. Notably, this sale involved Restricted Stock Units (RSUs) vesting on June 24, 2026, contingent on continued service. Rather than signaling negative outlook, this appears to be scheduled compensation realization. Indeed, the other six directors have maintained their holdings without selling, suggesting continued positive sentiment. The investment decision hinges on current valuation appropriateness and sustainability. With cash holdings of $5.44 per share against a stock price of $4.96, the company theoretically trades at a discount. The price-to-book ratio of 0.82x and price-to-sales ratio of 0.94x suggest undervaluation relative to assets and revenue. However, enterprise value reaches $738.9 million—6.84x revenue—due to $705.6 million in non-recourse project finance debt. While the debt-to-equity ratio hits 544%, critically, this debt is non-recourse, meaning individual projects bear repayment obligations without recourse to the parent company. Refinancing of SP1 debt maturing in Q2 2026 represents the key near-term investment risk. Management expressed confidence citing improved financial position and multiple refinancing options, but uncertainty remains until specific terms emerge. Successfully refinancing the existing 6.1% debt at favorable terms could further improve profitability through reduced interest expense. Conversely, refinancing failure or unfavorable terms would negatively impact shares. Broader solar sector headwinds also warrant consideration. Following Trump's November 2024 election victory, solar companies like First Solar and Sunnova Energy declined on policy uncertainty. However, Spruce Power's business model focusing on existing asset operations and services rather than new installations provides relative insulation from policy changes. The company's May 2025 authorization of a $50 million share repurchase program (valid through May 2027) signals management views current prices as undervalued. From a valuation perspective, positive scenarios require: (1) successful Q2 2026 refinancing, (2) quarterly net income turning positive, (3) stable $10+ million SREC revenue inflows, and (4) share price breaking above $6 for additional upside momentum. Negative scenarios include: (1) refinancing failure or unfavorable terms, (2) SREC price declines from adverse solar policy, (3) price falling below $4 breaking insider purchase levels, and (4) rising operating costs delaying breakeven achievement. The market has repriced shares to reflect fundamental improvements, but further upside or correction depends on Q2 2026 refinancing success. Near-term, expect $5-6 range consolidation with the refinancing announcement as the next inflection point. Long-term, SREC revenue stabilization and service segment expansion will determine sustainable growth. As director cluster buying proved prescient, the company's turnaround is underway—but small-cap volatility and refinancing risk demand cautious positioning.