You would be forgiven for never having heard of ASX consumer discretionary share MotorCycle Holdings Ltd (ASX: MTO).
The $125 million company tends to fly under investors' radars despite being behind more than 40 motorcycle dealerships and accessories retail franchises across Australia.
And one of its newly instated insiders appears to have made the most of recent weakness in the stock.
The MotorCycle Holdings share price has tumbled more than 41% over the last 12 months to trade at $1.72 at the time of writing.
Let's take a closer look at the insider buying going down at the ASX share this week.
Insider forks out $1m on embattled ASX share
MotorCycle Holdings director and executive Michael Poynton has topped up his stake in the ASX share – forking out more than $1.1 million to do so.
The insider snapped up 750,000 of the company's shares for $1.53 apiece last Friday, leaving him with a 9% stake. And what a buy it's proven to be – the parcel has already provided $150,000 of capital returns.
Interestingly, however, just a few months back Poynton didn't have any position in the ASX share.
The now-insider was the co-founder of motorcycle wholesale business Mojo Motorcycles – which was snapped up by MotorCycle Holdings for $60 million last year.
Of the purchase price, $20 million was paid in cash, up to $10 million was deferred, and the rest provided as scrip with each share valued at $2.60. That left Poynton with a notable stake in the ASX-listed company.
And he isn't the only insider buying up the stock this month.
MotorCycle Holdings founder, managing director, and CEO David Ahmet bought 50,000 shares for $1.72 each in an ASX market trade on 14 March. The following day, director Peter Henley snapped up 8,900 shares for $1.69 apiece.
What's been dragging on MotorCycle Holdings shares?
So, what might be weighing the MotorCycle Holdings share price down lately? Well, the company operates in a cyclical environment.
When the cost-of-living rises – perhaps spurred by interest rate hikes – people tend to put a pause on non-essential purchases. Indeed, the company noted demand for motorcycles has tumbled in last month's half-year earnings release.
Meanwhile, the cost of doing business is increasing, driven by higher wages, transport, and logistics costs.
MotorCycle Holdings posted $277.5 million of income last half – a 17% year-on-year improvement. Though, its net profit after tax (NPAT) slumped 17% to $10.5 million.
But management is confident it can turn things around – and recent buying suggests insiders might be too. Ahmet commented:
Despite the current economic challenges, the group has continued to invest for future growth including our people and digital capability, our dealer network, and our warehouse and supply chain management systems.
We are confident that the business improvements and capabilities we are investing in will strengthen our competitive position and generate long-term value for shareholders.
