Investing

Hedge Fund Coliseum Capital Joins Universal Technical Institute's Shareholder Register With $1.35 Million Buy

Connecticut based hedge fund Coliseum Capital revealed this week that it bought 216,719 Universal Technical Institute (US:UTI) shares at an average of $6.24 per share or a total of $1.35 million.

The transaction follows Universal’s strong fourth quarter earnings update and related share volatility. The average price was a roughly 20% discount to UTI’s price at the beginning of the year and significantly below its 52 week high above $11.

UTI is a workforce educational training provider for the transportation and health care industries and operates 16 campuses in 9 states. The company sports a $220 million market capitalization and trades at 17 times trailing 12 month earnings.

Coliseum Capital, led by Co-founder Chris Shackelton, has an average trade profitability of 22.44%, according to Fintel’s insider trading tracker for the hedge fund. 

The company said its latest quarterly revenues grew 13.5% to $110.6 million versus analysts’ $111 million forecast. EBITDA declined over the year from to $14.0 million from $18.3 million but was ahead of the $12.5 million consensus forecast.

Adjusted net income dropped to $8.0 million from $13.9 million in Q4 of 2021. The company’s three cents share net profit topped one cent a share analyst consensus.

Total new student starts were flat at around 5,965, and end of the period, full-time active students rose 5% over the year to 14,380.In 2023, management expects new student starts will double to 22,000-23,500, including 10 months of contribution from its Concorde acquisition and the ramp-up of new UTI campuses.

UTI expects 2023 revenue between $595 to $610 million with adjusted EBITDA of $58 to $62 million and adjusted net income between $14 to $18 million.

Analyst Raj Sharma from B Riley Securities is ‘buy’ rated on the stock with a $14 price target based on a strong business model, growth prospects and discount valuation.

Sharma expects UTI to grow sales and earnings by more than 20% per year for the next few years. Fintel’s forecast analysis for UTI highlights that the average consensus price target for the stock in the street is $12.75, suggesting there is 100% capital upside in the stock in the medium term.

In other news, Coliseum Capital is currently working on a $4.35 a share hostile bid for bedding manufacturer Purple Innovation (US:PRPL), where fellow investors AWH Capital last week urged the company to reject the offer as too low.

This article originally appeared on Fintel

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.