(MENAFN- ValueWalk)
elenathewise / depositphotos The founder has bought 1.25 million shares above the SPAC merger price and ahead of the completed merger. But why?
On Thursday afternoon following the closure of US equity markets, a form 4 was filed for DiamondHead Holdings (nasdaq:dhhc ) which revealed the groups CEO and Chairman David Hamamoto had bought more stock in the blank check company ahead of its planned merger with Great Southern Homes.
CEO Purchases DiamondHead Shares
The latest filing, Hamamoto disclosed the purchase of 250,000 DHHCU shares at an average price of $10.087 each per share.
Gates Capital Management Reduces Risk After Rare Down Year [Exclusive]Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for read more
Get The Full Walter Schloss Series in PDF
Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.
q4 2022 hedge fund letters, conferences and more
Find A Qualified Financial Advisor
Finding a qualified financial advisor doesn't have to be hard. smartasset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes .
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now .
These trades come only one week after the Chairman bought 1 million shares at $1.09 last week on the 12th of January.
Hamamoto owns a total of approximately 9,875,000 shares following the latest transaction, boosting his total ownership in the SPAC to around ~23% of DHHC's total float.
So why is the Chairman and CEO buying stock before the completion of the proposed merger?
Hamamoto may be expecting a bullish full year result from Great Southern Homes before the entities are set to merge.
Great Southern Homes initially entered into a definitive business combination agreement with DiamondHead Holdings back in early September.
The transaction, when completed, will see the DHHC ticker trade under UHG on the Nasdaq with a new name called United Homes Group. The deal will create a combined company with an estimated enterprise valuation of $572 million and will provide the new entity with around $320 million in cash proceeds for the balance sheet.
Fintel journalists have an inkling that United Homes may be poised to report a full-year result above homebuilder peers.
During the investor call presentation that occurred in October, United Homes reported that it closed 873 units which represented 10% growth when compared to 2021 and set a new record for the company.
The firm highlighted that even though interest rates were rising, putting pressure on consumers, United Homes continued to show strong growth metrics. The company's strategic focus is on first home buyers to alleviate the pressure that rising rates are having on demand.
In the outlook section of the investor call, UHG's management provided models of future financial forecasts for the 2022 and 2023 full year.
For the year end 2022, United Homes management expects that it will have generated $515.5 million in revenue with $97.1 million of adjusted EBITDA and $91.6 million in net income.
The guidance, if achieved, will represent growth in 2022 of 19% and 47% for sales and net income.
Next year, in 2023, the homebuilder is guiding that it can generate a further 22% growth in sales to $630.2 million and 22% adjusted EBITDA growth to $118.2 million. Net income is expected to fall by -11% to $81.2 million due to increased forecasted taxes.
If United Homes can achieve this growth against a backdrop of probable recession in 2023, it could be one of the top stock picks of the year.
Research on the Fintel platform highlighted that the DiamondHead Holdings SPAC has already attracted 111 institutions on the register that own 27 million units in the trust.
The largest institutional owners that have bought shares in the SPAC include: BlackRock Inc, aristeia capital ,
marshall wace , Citadel Advisors, saba capital management , mizuho markets americas , HSBC Holdings, adage capital partners and UBS O'Cconnor.
Article by Ben Ward, fintel