Insiders at Vuzix (VUZI) and Tiffany (TIF) Push Back in Wake of ‘Fake News’, Weak Earnings

The market was sent into a tizzy this week, with the Dow sliding by over 1,100 points during the final two days of the trading week. President Trump was at the center of the swirling market maelstrom, stoking fears that a U.S/China trade war could be looming by revealing plans to slap tariffs on up to $60 billion worth of Chinese goods.

It also wasn’t a great week on the market for three specific companies, Tellurian Inc (NASDAQ:TELL), Tiffany & Co. (NYSE:TIF), and Vuzix Corporation (NASDAQ:VUZI), all of which ended the week lower. However, all three companies were also on the receiving end of votes of confidence from insiders, who grabbed shares at a discount this week. As such cases of insider buying are a great signal that shares may be undervalued, let’s take a look at these transactions and see what’s been happening with these stocks of late.

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Vuzix Corporation (NASDAQ:VUZI)

Who Bought Shares: CFO & EVP Russell Grant

How Many Shares Were Bought: 5,000 @ $6.10 per share

Date of the Transaction(s): March 22

Vuzix Corporation (NASDAQ:VUZI) Addresses Fake News: In a press release issued on Wednesday, a day before the insider purchase, Vuzix shared an update on its business activities. The update was intended to combat misinformation about Vuzix that the company said was making the rounds on social media and in the blogosphere (more on that below).

Among the salient points raised was the fact that Vuzix’s master supply agreement with Toshiba requires that company to place $5 million worth of orders for Vuzix’s custom smart glasses within the first 12 months or lose their exclusive rights to sell them. Toshiba placed its first of such orders earlier this month, which totaled $1.1 million.

Mox Reports Slams Vuzix Corporation (NASDAQ:VUZI), Predicts $0.50 Shares, Delisting: The insider purchase, as well as the Vuzix press release, were both largely in response to a scathing report issued by Mox Reports on March 16. Vuzix shares have fallen by 16% since the release of that report, which accused the company of fraudulent stock promotion ahead of Vuzix’s $30 million direct offering in late-January.

The report claimed that Vuzix’s Blade smart glasses didn’t actually work with Alexa at all (despite later claiming that the addition of Alexa functionality would only take an hour to implement and was a non-issue either way), and that glowing press reports touting Blade’s Alexa features were all spearheaded by a stock promoting fraudster.

Vuzix disputed those claims in its recent press release, stating that Blade glasses do work with Alexa and the Alexa voice assistant, and providing links to several videos from recent tech conferences that demonstrate just that. Vuzix also claims to have shown Blade to thousands of industry professionals and media members, in contrast to Mox Reports’ assertion that only a small, handpicked group of media outlets were given access to the device, which they claim is little more than a non-working prop.

On the next page we’ll look at two other stocks that had compelling insider buying activity this week.

Tiffany & Co. (NYSE:TIF) 

Who Bought Shares: Director Francesco Trapani and Director James Lillie

How Many Shares Were Bought: 15,000 @ $98.11 and 5,000 @ $97.81, respectively

Date of the Transaction(s): March 20-22

Tiffany & Co. (NYSE:TIF)’s Disappointing Same-Store Sales Growth Doesn’t Deter Insiders: Two Tiffany Directors bought shares during the past trading week, taking advantage of a 5% decline in the stock last Friday after Tiffany’s latest quarterly results disappointed. Same-store sales grew by just 1% during the company’s fiscal fourth quarter, ended January, well off estimates of a 2.8% rise on a constant currency basis. Earnings guidance for the company’s 2018 fiscal year was also slightly lower at the mid-range than analysts had been predicting.

Counterfeiters Eating Into Tiffany & Co. (NYSE:TIF) Sales: As Business Insider reported on Tuesday, Tiffany and other luxury brands are embroiled in an all-out war with counterfeiters on Facebook Inc (NASDAQ:FB)‘s Marketplace. Facebook had removed over 200,000 listings of suspected counterfeit products from Marketplace within the first six months of 2017, while Tiffany itself reported having thousands of ads taken down that were selling counterfeit versions of its products. One seller found by Business Insider was selling nothing but counterfeit Tiffany bracelets.

Facebook is trying to spot likely fakes through machine learning, but many feel the company isn’t doing enough to actively police its Marketplace. Facebook stated that it will also begin asking some luxury goods companies for some form of further identification on their products that will make it easier to separate real ones from fakes.

Tellurian Inc (NASDAQ:TELL)

Who Bought Shares: Bristol Investment Fund, Ltd.

How Many Shares Were Bought: 75,000 @ $7.08 per share

Date of the Transaction(s): March 20

Bristol Investment’s Insider Connection to Tellurian Inc (NASDAQ:TELL): The fund in question is affiliated with Tellurian Director Diana Derycz-Kessler and her spouse Paul Kessler, who has investment control over the shares held by the fund. The fund now owns 2.03 million Tellurian shares, while the Director owns 36,415 shares directly and another 613 shares indirectly.

$50 Million Investment Spurs Rally: This insider transaction came just a day before Tellurian Inc (NASDAQ:TELL) announced that it had received a $50 million investment from an affiliate of Bechtel Oil, Gas, and Chemicals. The investment implied a share price of $8.16 on Tellurian’s stock, about 20% higher than it traded at as of Wednesday’s close. Investors made up about half of that difference Thursday morning, sending shares up by 10% in response to the investment.

Disclosure: None