T.J. Rodgers Bought Up This Beaten-Down Battery Stock. Here’s Why.
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Enovix Chairman T.J. Rodgers says its share price makes it a “lower-risk investment.”
Courtesy of Enovix
Enovix
stock has tumbled this year, but insiders, led by Chairman Thurman J. “T.J.” Rodgers, have bought up shares of the maker of batteries for mobile devices.
At Tuesday’s close at $9.46,
Enovix
(ticker: ENVX) stock has lost two-thirds of its value so far in 2022, compared with a 17% drop in the
S&P 500 index
.
This year has been a big bad macro for techs, particularly for money-losing companies that have recently gone public through special-purpose acquisition companies, such as Enovix. The company went public through a SPAC, Rodgers Silicon Valley Acquisition Corp., in July 2021.
T.J. Rodgers, the head of the SPAC, said in a press release announcing the transaction, “Developing and manufacturing a 100% active silicon anode has long been a goal of the battery industry because it dramatically increases performance. We believe that Enovix will be the first to deliver at scale due to its proprietary 3-D cell architecture, world-class team and automated manufacturing.” Rodgers himself is known as the founder and longtime CEO of Cypress Semiconductor, now owned by Germany’s
Infineon
.
Rodgers paid $3.6 million over May 13, 17, and 23 for a total of 400,000 Enovix shares, an average price of $8.89 each, according to forms he filed with the Securities and Exchange Commission. He purchased the shares through a trust, and now owns 21.4 million Enovix shares through trusts and a limited liability company, and 3,162 shares in a personal account. He is the largest Enovix shareholder, with a stake of more than 13%, according to S&P Capital IQ.
“I’m 74,” said Rodgers, in a phone interview, “I’m not really buying stock to add to my position.” He bought Enovix shares through a charitable trust that has a policy for “lower-risk investment,” a metric that Rodgers says the stock now meets.
“I took Enovix public at $10 a share, and investors bid the PIPE”—the phase of private investment in public equity while going public—”to $14,” he said. Companies typically use a PIPE to generate additional cash from SPAC deals and to substantiate the valuation. Rodgers declined to specify a fair value for Enovix stock, but noted that the $10 and $14 prices “are clearly achievable in this market.”
Enovix now is “actually pretty similar to Cypress in the early days,” Rodgers said. “No one knew if [Cypress] could turn a profit.” But Enovix has “plenty of money—more than Cypress had.”
Other Enovix buyers include director J. Daniel McCranie and Edward Hejlek, chief legal officer. McCranie paid $268,500 on May 13 for 30,000 Enovix shares, an average price of $8.95 each. McCranie, a former Cypress Semi executive, now owns 503,162 shares. Hejlek paid $89,900 on May 13 for 10,000 Enovix shares, an average price of $8.99 each; he now owns 171,921 shares.
In a May 12 report, Oppenheimer analyst Colin Rusch wrote that the company’s just-reported first quarter was a “validation of growth plans and technology.” “Given $408 million in cash on hand,” Rusch added, “we believe Enovix is well capitalized for its growth plans and believe the announcement of its Fab 2 location will prove the next catalyst for shares along with first product revenue.” He reiterated an Outperform rating and 12-18 months price target of $38.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
