Calavo CEO’s $1.9 Million Stake Boost: A Vote of Confidence in Avocado Growth

Lecil E. Cole, CEO of Calavo Growers (NASDAQ: CVGW), has significantly increased his personal stake in the company with two major stock purchases totaling $1.94 million in mid-April 2025. This bold insider move, detailed in a recent SEC Form 4 filing, underscores Cole’s confidence in Calavo’s trajectory amid a backdrop of improving financials and strategic initiatives. Let’s dissect the implications for investors.

The Insider’s Play: Timing and Scale

On April 14, Cole bought 38,155 shares at an average price of $24.60, followed by an additional 40,775 shares on April 15 at $24.57, bringing his total direct ownership to 615,000 shares. The purchases were executed through multiple trades to mitigate volatility—a common strategy for insiders—yet the sheer scale of the investment demands attention.

Cole’s actions contrast sharply with passive ownership. By directly tying his wealth to Calavo’s performance, he aligns his incentives with long-term shareholders. Notably, the Form 4 filing specifies that these transactions were not conducted under a Rule 10b5-1 plan, meaning Cole made the decisions in real time, not as part of a pre-arranged strategy. This lack of pre-planning amplifies the signal of his conviction.

Why Now? Calavo’s Turnaround in Motion

The timing of Cole’s purchases coincides with several positive developments:

1. Q1 Earnings Beat: Despite modest revenue misses, Calavo’s first-quarter earnings surged, driven by a 30.5% jump in avocado prices. The Fresh segment, which accounts for most revenue, reported a 23.7% sales increase to $139.9 million.
2. Cost Discipline: Gross profit rose 46.2% to $15.7 million, aided by a 23.6% reduction in administrative expenses.
3. Buyback Catalyst: A $25 million share repurchase program approved in March 2025 signals management’s belief that the stock is undervalued.

These factors suggest Calavo is capitalizing on industry tailwinds. Avocado demand remains robust, with global consumption growing at 3-5% annually, while Calavo’s vertically integrated model—spanning procurement, processing, and distribution—gives it pricing power.

Market Context: Valuation and Dividend History

Calavo’s market cap stands at $445.2 million, a figure that may appear modest until paired with its 3.24% dividend yield, a streak maintained for 24 consecutive years. This consistency contrasts with peers like Chiquita Brands (NYSE: CQB), which has no dividend.

A deeper look at the stock’s performance is warranted.

Technical and Fundamental Crossroads

The stock’s recent price action—hovering near $24.50—aligns with Cole’s average purchase price, suggesting he’s confident in a breakout. Meanwhile, the dividend yield, supported by a 10-year average free cash flow of $14 million annually, provides a safety net for investors.

The $25 million buyback, equivalent to ~5.6% of the current market cap, could further tighten supply and boost EPS. If executed fully, it could add ~4% to earnings per share, assuming no stock price appreciation.

Conclusion: A Bargain in the Green Sector?

Cole’s $1.9 million investment, combined with Calavo’s operational improvements, positions it as a compelling play on the avocado boom. Key data points:

• Margin Expansion: Gross margins rose to 11.2% in Q1 2025 from 7.6% in Q1 2024, signaling cost controls are working.
• Buyback Math: If shares trade at $24.50, the $25 million buyback could retire ~1 million shares, reducing the float by ~2%.
• Dividend Safety: With a payout ratio of ~40% of FCF, the dividend appears sustainable even in lean years.

The CEO’s direct ownership now equals ~1.3% of the company’s shares, a meaningful personal stake. For investors, this insider activity, paired with improving fundamentals and a disciplined capital strategy, suggests Calavo is worth a closer look.

In a sector where volatility reigns, Cole’s bold bet may just be the first chapter of a turnaround story that bears fruit.