In a notable transaction, Parallel49 Equity, ULC, a major shareholder in CPI Card Group Inc . (NASDAQ:PMTS (TSX:PMTS)), has sold a significant portion of its holdings in the company. On October 2, 2024, Parallel49 Equity divested 1,380,000 shares of CPI Card Group's common stock at a price of $21.00 per share, resulting in a total sale value of approximately $28.98 million.
The transaction was disclosed in a recent filing and indicates a substantial move by the investment firm. Following the sale, Parallel49 Equity's affiliated funds, Tricor Pacific Capital Partners (Fund IV), LP and Tricor Pacific Capital Partners (Fund IV) U.S., LP, now hold 3,027,160 and 1,786,817 shares respectively. This change in ownership comes as part of a planned sale under an Underwriting Agreement between the reporting person and the issuer dated September 30, 2024.
Parallel49 Equity, through its general partner role in the Tricor Funds, manages the investments of the funds. However, the members of the investment committee, comprised of Bradley Seaman, David Rowntree, J. Trevor Johnstone, and Roderick Senft, have disclaimed beneficial ownership of the shares held by the Tricor Funds.
Investors and market watchers often pay close attention to insider transactions as they can provide valuable insights into a company's prospects and the confidence level of its major stakeholders. The sale by Parallel49 Equity is likely to attract attention due to its size and the potential implications for CPI Card Group's stock.
In other recent news, CPI Card Group Inc . reported a mixed financial performance in its Q2 earnings call, with a 3% increase in net sales, boosted by growth in the prepaid segment, instant issuance, and card personalization businesses. However, net income and adjusted EBITDA declined by 8% and 6%, respectively. For the first half of the year, the company's net income decreased by 34% to $11.5 million, and adjusted EBITDA fell by 7% to $44.9 million.
In addition, CPI Card Group announced the initiation of a secondary public offering of 1,000,000 shares by certain stockholders associated with Parallel49 Equity. The completion and terms of this offering are contingent on prevailing market conditions. All proceeds from the sale will go directly to the selling stockholders, with CPI Card Group not offering any of its own shares nor receiving any proceeds from the transaction. D.A. Davidson & Co. is serving as the sole book-running manager for the offering.
In terms of future outlook, CPI Card Group has updated its full-year 2024 projection to mid-single-digit sales growth and slight adjusted EBITDA growth compared to 2023. The company is also investing in people, technology, and its digital business for future growth. These are among the recent developments for CPI Card Group.
InvestingPro Insights
The recent sale of a significant portion of CPI Card Group Inc. (NASDAQ:PMTS) shares by Parallel49 Equity comes at an interesting time for the company. According to InvestingPro data, PMTS has experienced a substantial price uptick over the last six months, with a 25.5% total return. This positive momentum is further reflected in the company's year-to-date performance, showing a 23.08% price total return.
However, it's worth noting that PMTS has taken a hit in the short term, with InvestingPro Tips highlighting that the stock has experienced a significant decline over the last week. This recent downturn is evidenced by the 1-week price total return of -13.19%.
Despite the recent volatility, CPI Card Group appears to be in a solid financial position. An InvestingPro Tip indicates that the company's liquid assets exceed its short-term obligations, suggesting a healthy balance sheet. Additionally, with a P/E ratio of 14.69, the stock may be considered reasonably valued compared to some industry peers.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for PMTS, which could provide valuable insights into the company's financial health and market position. These additional tips, available on the InvestingPro platform, could help contextualize Parallel49 Equity's decision to sell and offer a broader perspective on CPI Card Group's investment potential.
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