Callaway’s Management Team Is Buying Shares. Should You? | The Motley Fool

Last week, golf equipment maker Callaway Golf announced that the chief executive officer and chief financial officer had purchased shares of the company for their own personal accounts.

Chip Brewer has been the chief executive of Callaway for almost a decade, and he’s received plenty of stock over that time as a part of his compensation.

On the other hand, Chief Financial Officer Brian Lynch bought a much more substantial position relative to his previous ownership.

On top of this strong sales growth, Callaway has also doubled its third-quarter equipment and apparel operating income over the last two years.

Yet despite this year’s impressive results, the stock is still roughly flat over the past 11 months.

Following the close of its acquisition in March, there was some uncertainty around whether Topgolf could get back to its sales level in 2019 before COVID-19 put a halt to the many corporate events that had been a sizable share of its revenue.

But last quarter, this uncertainty was put to rest as Topgolf recovered to more than 100% of that level, and the division is now the leading contributor to Callaway’s overall revenue.

There’s an old saying in investing that executives sell shares for many reasons, but only buy for one.

Though it only amounts to less than 1% of the company’s current market cap, it’s an encouraging sign to see Callaway setting aside some capital for repurchases since it has promising reinvestment opportunities elsewhere in its business.

All in all, between this buyback program and the recent management purchases, it’s clear that the individuals who know Callaway the most intimately think it’s an opportune time to own more shares.

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