Today I added a fairly large amount to my BROS position. I’ve been monitoring reviews and news about recent openings, and it’s mostly good stuff. I particularly liked this article about the first Dutch Bros location in Georgia, which just opened a few days ago:
Oregon native proves ‘cool enough’ to open new Dutch Bros in Warner Robins
The article highlights the benefit of Dutch Bros’ company owned growth strategy verses the franchise model its competitors are using. The company owned approach that Dutch Bros uses will provide the intimate depth and experience to maintain consistency and quality that may be more difficult under the franchise model. Think In-N-Out verses McDonald’s!
I was reading through SEC filings, and noted that Dutch Bros blackout period, where insiders are restricted from trading the stock, generally begins on the 15th day of the third month of the fiscal quarter. That was yesterday. The blackout period continues until two full trading days have elapsed from the next quarterly earning conference call. The next quarterly report has not been announced, but it is expected to be sometime between August 5th – 11th.
The stock is down about 30% from its February intraday, all-time high and about 20% above its April “Liberation Day” induced low. The quarter before the one announced in February was excellent, the quarter reported in February was stellar, and the quarter reported in May was excellent. Fundamentals look good, and yet the stock is down.
I can’t blame people for selling. Insiders have been selling. That’s not uncommon for a company that went public fairly recently. Time to unlock and redeploy the wealth. For other investors who patiently waited while the company ground away (pun!) toward profitable growth and the stock popped, I can’t blame them for taking some profits, either.
Now, I think it is a nice time to accumulate. With the blackout period and no insider sales for a few weeks, the grumbling about that will be a bit quieter. Also, as we get closer to the earnings report, we may get some excitement back in the stock. Some purchasing in this relatively thinly traded stock with a relatively small float and no insiders selling against it could be quite favorable for some pre-earnings price appreciation.
The real appreciation that I’m expecting, is after the earnings report. The evidence I am seeing is that this will be yet another excellent quarter.
I think I’m convincing myself to buy more BROS in the next few days…a lot more.
With Love,
P. Gustav Mueller, author of The Present