Leverage Equity Research has been following organic marketplace leader Whole Foods (NASDAQ:WFM) closely in 2016. This article is intended to focus on Whole Foods Market (NASDAQ: WFM) stock ownership to gauge its price trend for the following three months.
Whole Food has bounced back from a low of $28 per share in May to $35 per share in June thus far.
Last quarter Whole Foods suffered a 3.82% loss of institutional ownership, partially due to its declined market share in the organic food industry. (See Figure 1)
For insider transactions, more executives had stock options exercised and sold in the market in the latest three months. (See Figure 2)
From a technical analysis standpoint, WFM support level remains at $28, and resistant level moves higher to $35. According to options transactions, the calls open interests significantly outweighed put options with a strike price mainly in the range of $32-$36.
For example, with an option expiration date of Aug 19, there are 5453 call options comparing to 635 put options at a strike price of $35 per share, and 616 call options compared to 285 put options at a strike price of $40 per share. More investors buy calls than sell its puts, indicating that investor sentiment is starting to turn to positive. (See Figure 3)
Since Whole Food has no debt, it is far less attractive to short sellers. Its short interest ratio has only five to seven days to cover. Whole Food has positive free cash flow; even its cash flow growth has stagnated recently. Thus, it has limited downside risk.
Meanwhile, a Confidential Treatment Order (CT Order) was filed in April. This may indicate that the company has reached an agreement with certain investment institutions.
No matter if Whole Food’s new 365 Strategy will boost its long-term growth or not, for the short period, Whole Foods offers some attractive buying opportunities before the next earnings call, which might also provide the insiders more selling high opportunities.