Q: Has your opinion changed on this stock based on insider buying? Would you consider it a value trap?
5i Research Answer:
An insider purchase could be a good signal for investors, depending on the context, like the size of the purchase relative to their income/net worth. In the MATR case, there has been a good amount of insider purchases in August (around $900K).
MATR has been buying back shares aggressively in recent quarters; the company repurchased 9% of its shares outstanding in the last twelve months. That being said, MATR just recently went through a large acquisition, which boosted the company’s debt level to an unsustainably high level. The company’s net debt/EBITDA is around 4.1x, which is quite high for a cyclical company. We think MATR could be more “investable” if the company manages to pay down debt to more reasonable levels.