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Designer Brands Stock Pops Following Insider Buying Activity

By Jon Quast – Sep 23, 2021 at 4:46PM

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The executive chairman now owns 6% of the company.

What happened

The stock of footwear retailer Designer Brands (DBI -2.56%) is having a good week. And it might be because an insider announced the purchase of almost 1.5 million shares. At the close on Thursday, the stock was up 10% for the week.

So what

Jay Schottenstein is Designer Brands' executive chairman, and he's apparently a fan of the stock right now. According to filings with the Securities and Exchange Commission, Schottenstein indirectly purchased almost 1.5 million shares through Jubilee Limited Partnership. The purchases took place in three batches, the most recent of which was on Sept. 20 for roughly $13 per share.

A person seems pleasantly surprised by something they're reading on a computer.

Image source: Getty Images.

Between shares owned directly and indirectly, Schottenstein now holds over 4.6 million shares of Designer Brands. And as of the company's most recent quarter, there were 73 million shares outstanding. This means that Schottenstein owns around 6% of the company, a sizable position for the executive chairman. 

Now what

The market loves it when an insider like Schottenstein is buying the stock. If anyone knows the business well, it's an insider. Therefore, buying activity is thought to be a precursor to the announcement of strong business results. 

But insider buying activity doesn't guarantee strong business results in the future. So be sure to keep a healthy dose of skepticism. Remember that Designer Brands' second-quarter sales were still below where they were two years ago, meaning it still hasn't fully recovered from the pandemic. Therefore, this retail company still has to fully recover before it can turn its attention back to future growth opportunities. 

Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Designer Brands Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Designer Brands Stock Quote
Designer Brands
$10.84 (-2.56%) $0.28

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