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InnerWorkings, Inc. (INWK) provides print management and promotional services to clients based in the United States and around the world. The company helps clients to find efficiencies to the management of marketing materials while also providing further insight into the data controlling the marketing supply chain. The company offers a wide range of fulfillment and logistics solutions. It also provides creative services which include website design and marketing collateral development services.
The company recently announced a new long-term agreement with Energizer along with expansion of its existing agreements with Nestle, MoneyGram, Unilever, and William Grant. These expansions focus in areas such as Latin America, Europe, Russia, and the Middle East.
InnerWorkings expects that these expansions will realize nearly $50 million in new organic revenue for 2014.
Heavy insider buying. This should eventually force shorts to cover and we anticipate a short squeeze is likely because of this factor. $OPK had a similar situation last year as shorts were eventually forced to cover as Dr. Frost was buying a lot of shares. What happens is that these insiders normally buy with cash accounts, which means shorts cannot borrow against their shares. In time, shares available to short “dry up,” leaving little to no shares available to short with, hence, this normally forces covering. Additionally, sentiment is turning positive in this name after the company was over speculated for some time. We feel the company’s shares are now undervalued significantly verses its fundamental story.
| Dec 6, 2013 | SAGARD CAPITAL PARTNERS, L.P. Beneficial Owner (10% or more) | 32,000 | Indirect | Purchase at $6.69 per share. | 214,080 |
| Dec 4, 2013 | SAGARD CAPITAL PARTNERS, L.P. Beneficial Owner (10% or more) | 108,700 | Indirect | Purchase at $6.69 – $6.7 per share. | 728,0002 |
| Dec 3, 2013 | SAGARD CAPITAL PARTNERS, L.P. Beneficial Owner (10% or more) | 47,200 | Indirect | Purchase at $6.57 per share. | 310,104 |
| Nov 21, 2013 | HOWARD JULIE Director | 14,800 | Indirect | Purchase at $6.95 per share. | 102,860 |
| Nov 21, 2013 | SAGARD CAPITAL PARTNERS, L.P. Beneficial Owner (10% or more) | 50,000 | Indirect | Purchase at $6.95 per share. | 347,500 |
| Nov 20, 2013 | SAGARD CAPITAL PARTNERS, L.P. Beneficial Owner (10% or more) | 55,400 | Indirect | Purchase at $6.77 – $6.81 per share. | 376,0002 |
High short interest. This should make for a fast pop upwards as again, shares being bought by insiders.
Profitable company, with new partnerships and closer to 52 week low – still over sold.
Large gap down. Many of these gap plays commonly fill the gap back upwards at least 70% when the above conditions are in play. We expect INWK to as well, fill at least 70% of the gap, if not 100%.
Let’s take a look at the charts:
We have marked in white some bullish indicators. The purple
accumulation line indicates a wedge forming and the money flow is
turning positive. Additionally, there is a large gap up to be filled
after the company became oversold recently, prompting insiders to buy,
and continue to buy heavily as noted earlier. With nearly 15% short
interest in this one, and positive sentiment from heavy insider buying,
we feel our price target of $9 a share might be low over the next 3
months or so. It’s possible we see over $10 before Q1, 14 is over.
