Update: MusclePharm Insider Buying Reinforces Thesis

Aug.15.14 | About: MusclePharm Corp. (MSLP)


Insider selling, or even buying, most time means little.

However here it's synergistic with my previous thesis.

The thesis is thus reinforced by the insider buying taking place in the last few days.

Ordinarily, I wouldn't be writing an article just to say insiders of a given company sold, or even bought, shares of a company. However, this time such insider trading gathers renewed importance because of the way it fits into my recent thesis. My thesis is that there's a transition happening at MusclePharm (OTCQB:MSLP), from a company which behaved as a dilutive penny stock, to a company where returns for insiders will be proportional to stable shareholdings.

It is in the context of this thesis, that insider buying by Brad Pyatt -- MSLP's CEO -- falls. Brad Pyatt and another insider have been buying MSLP stock in the open market over the last few days, with Brad Pyatt buying 15,500 shares and increasing his position by around 3% (Source: SEC EDGAR I, II, III). While it's not an immense increase, it does send a message confirming that the company is now structurally different, and positioning to get more shares requires some buying in the market instead of just printing more stock.

The company itself is growing massively and turning profitable, while having little debt. It stands to be a massive growth stock if its attempt to build a well-known brand succeeds, which seems to be happening with its endorsement by names such as Arnold Schwarzenegger and Tiger Woods. The way I came across MusclePharm's products was by seeing them in a store in Lisbon (so it's not a fraudulent penny stock), and some of my friends confirmed knowing the brand and it being well-known within the bodybuilding set. Additionally, MusclePharm is clearly trying to reach a wider audience, and within the products it promises to launch is a energy drink, as well as fitness supplements for the golfing set.

Disclosure: The author is long MSLP. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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