Teal Linde, manager, Linde Equity Fund
FOCUS: North American mid and large cap stocks
Top Picks: Air Canada, Blue Owl, Pinterest
MARKET OUTLOOK:
Corporate insiders typically buy shares when they believe their stock is undervalued or when they foresee strong growth. Their purchases are often viewed as bullish signals. Conversely, when markets are surging and insiders remain on the sidelines or are selling instead, it may suggest that valuations are stretched or that insiders are uncertain about sustaining current performance levels. This divergence between insider behaviour and market optimism can signal that the rally is driven more by speculation, momentum, or external factors than by fundamental business strength.
Historically, periods marked by strong insider buying have often preceded market gains, while rallies lacking such participation have been more prone to corrections. Therefore, the lack of insider buying during last month’s sharp selloff may indicate that insiders view the sold off price levels as still not attractive enough to invest their own money, raising cautionary flags for retail and institutional investors alike.
On the other hand, retail investors have been a significant force in the stock market’s recovery of late. After the sharp selloff triggered by tariff announcements, retail investors, especially those trading through exchange traded funds (ETFs), were major net buyers, outnumbering sellers by nearly four to one among self-directed accounts at Vanguard. This surge in retail activity, particularly in broad market funds like VOO and SPY, has been a key driver behind the market rebound, as many retail investors continued to “buy the dip.” While both institutional and retail investors were net sellers during the initial downturn, retail flows turned positive as the market stabilized, helping push the S&P 500 Index above its April 2 closing level and marking the longest winning streak for the S&P 500 in 20 years. So, who is a better indicator of where the market goes from here – the retail investors or the insiders?
- Market-moving news, fast: Get the BNN Bloomberg App now
- Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe
TOP PICKS:
Air Canada (AC TSX)
Air Canada is trading at significant discount to its historical valuation. Along with a rebuilt balance sheet, the company is performing a lot better today than five years ago during early COVID-19 where it was trading at a similar price to where it is now. Believing its shares to be undervalued, in November 2024 when its share price was near $24, Air Canada management instituted a one-year share buyback plan for up to 35,783,842 shares, or roughly 10 per cent of outstanding shares, from Nov. 4, 2024, to Nov. 4, 2025. Demonstrating their conviction, the company bought 90 per cent of its allowable share repurchase within the first three months of a 12-month program. With its share price subsequently falling over trade war concerns, several insiders bought shares in late February around $17. Furthermore, on March 3, the board issued a boatload of stock options to management at a strike price of $17.03. Then on May 8, 2025, the company announced a substantial issuer bid to purchase up to $500 million worth of stock. At its current price, Air Canada represents an attractive turnaround opportunity currently trading close to its five-year baseline offering around 35 per cent upside upon a return to where it was trading at just five months ago.
Blue Owl Capital (OWL NYSE)
Blue Owl is an industry leader riding three secular waves in the investment world. One being the growth of private credit (of which direct lending is the main activity). Secondly, the growing opportunity to capitalize on sale and lease back transactions with investment grade companies seeking to monetize their real estate assets. Thirdly the opening up of alternative investments previously reserved for institutional investors to the untapped retail investor market. Benefitting Blue Owl’s largest private credit segment, the average institutional investor’s allocation to private credit today is estimated to be around four per cent to five per cent of total assets. Industry expectations are for the allocation to double to an average of 10 per cent in the next five years with the money largely coming from the private equity allocation which has lost some favor due to being less liquid and requiring longer time commitments. Blue Owl offers a 4.8 per cent dividend yield, and a double-digit top and bottom-line growth profile while trading at 23 times 2025 expected earnings.
Pinterest (PINS NASD)
Pinterest is an attractive growth at a reasonable price stock where new management has made noticeable improvements over the last couple of years. The company’s revenues are growing at about a 14 per cent annual rate while trading at a price to earnings ratio (P/E) less than 19 on 2025 expected earnings per share (EPS). Pinterest is a visual search and discovery platform in which users explore their interests, seek creative inspiration, and browse items they may want to purchase. Women make up around two thirds of its 500 million plus user base, while Gen Z users are around 40 per cent of users and the fastest growing user cohort. Spurred by new management and their leveraging of AI and machine learnings, the company is increasing user engagement by making its content more relevant and more shoppable, while at the same time being able to increase its ad load. In terms of revenue growth potential, Pinterest currently earns an average revenue per user (ARPU) of US $9 from Americans and Canadians, US $1.38 from Europeans, and US $0.19 from the rest of the world. Having 80 per cent of their users in Europe and rest of the world, where monetization is in the early innings, underscores just how much ARPU, and total company revenue, upside exists for Pinterest. The company just announced better than expected quarterly results on Thursday and raised its guidance. Revenue grew 16 per cent to $855 million while global monthly active users rose 10 per cent to 570 million.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AC TSX | Y | Y | Y |
| OWL NYSE | Y | Y | Y |
| PINS NASD | Y | Y | Y |
PAST PICKS: May 13, 2024
KINSALE CAPITAL (KNSL NYSE)
- Then: US$375.41
- Now: US$447.79
- Return: 19%
- Total Return: 19%
FIVE BELOW (FIVE NASD)
- Then: US$140.03
- Now: US$100.98
- Return: -28%
- Total Return: -28%
LINAMAR (LNR TSX)
- Then: $71.83
- Now: $61.70
- Return: -14%
- Total Return: -13%
Total Return Average: -7%
| DISLCOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| KNSL NYSE | Y | Y | Y |
| FIVE NASD | Y | Y | Y |
| LNR TSX | N | N | N |
