If multiple insiders at the same organization are purchasing stock simultaneously, investors should take note. This buying pattern – which is called ‘cluster buying’ – can be a strong indication that the stock is undervalued.
In this report, we are going to highlight a cluster buying pattern at Teleperformance SE (TEP:FP). Teleperformance is a French telemarketing and teleservices provider that offers solutions to companies in a range of industries including banking and financial services, travel and hospitality, healthcare, and retail. It is listed on the Euronext Paris stock exchange and currently has a market cap of €13.3 billion.
Insider Buying at Teleperformance
Our data shows that between November 11 and November 25, thirteen insiders at Teleperformance bought stock. The insiders paid between €165 and €225 for their shares. Among those who purchased stock were:
- Chairman and CEO Daniel Julien
- CFO Olivier Rigaudy
- COO Agustin Grisanti
In total, the thirteen insiders invested over €5.2 million in Teleperformance stock.
There are two things that stand out here.
Firstly, several top-level insiders have purchased stock. Research shows that top-level insiders are more successful predictors of future stock performance.
Secondly, the insiders have invested a considerable amount of money in TEP stock. This indicates that they are convinced that the stock is undervalued.
Teleperformance stock recently tanked after the Colombian government opened an investigation into the company’s work practices in the country. The share price fell nearly 40% on the news.
Those within the company clearly believe the group is in the clear, however. Not only have multiple insiders purchased stock, but management has launched a new share buyback worth up to €150 million to capitalize on the low share price.
“The management team of the Colombian subsidiary has always developed the company in compliance with the law," Teleperformance said in a statement.
It’s worth noting that analysts at HSBC have said that the recent share price fall was "exaggerated" and that it has created a good risk-reward.
In light of the large share price fall, we see the insider buying here as a bullish indicator.