Goosehead (GSHD) IPO Lockup Expiration and IntriCon (IIN) Partial Sale
Goosehead Insurance (GSHD): It’s been 180 days since Goosehead went public, which means that today is lockup expiration day. This means major shareholders and company insiders that couldn’t sell following the IPO now can. This is relevant because Goosehead has a relatively low float. In the IPO 9,809,500 Class A shares were sold, leaving 3,723,767 Class A shares as restricted, and 22,746,667 Class B shares as restricted.
In other words, around 27% of total shares outstanding have been trading freely. Now, the remaining 73% of shares are in play, subject to volume restrictions (big shareholders can’t dump all their stock at once, even if they want to).
Research shows that lockup expirations drive stocks down by an average of 3% to 4% on that day since the extra shares available can depress the price. In the long run, they don’t really matter. I think these expirations are good as they help diversify the investor base and let investors know what the demand environment is like.
In terms of Goosehead, I don’t think we’re going to see big investors and insiders flee the stock. Some will sell, and that’s good. We want more shares on the market to help with price discovery. Based on Goosehead’s price action today—shares are up around 10% on modestly-higher-than-normal volume—it looks like demand is strong.
Bottom line: Goosehead is still a buy. But pick your spots and average in. And expect the stock to jump around as volume increases due to new shares hitting the market.
IntriCon Sale
IntriCon (IIN) continues to dribble lower and is now forcing us to take partial profits, which I haven’t wanted to do. There’s no fundamental news here, and I’m still bullish on the stock. Earnings are out November 5, a week from next Monday. I’m expecting that to be a positive catalyst, but the price action right now is clearly not working in our favor, so we have to book a partial profit in case the market takes another leg down. Sell a quarter position and Hold the rest. SELL A QUARTER, HOLD THE REST.