Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some interesting insider buying at Herbalife Nutrition Ltd (HLF:US). Herbalife is an American company that develops and sells dietary supplements. Founded in 1980, it operates in over 90 countries worldwide today. The company is listed on the New York Stock Exchange and currently has a market cap of approximately $2.02 billion.
Insider Buying at Herbalife Nutrition
2iQ data shows that between February 21 and February 22, two insiders at Herbalife bought stock. Those who purchased shares were:
- Board member Donal Mulligan (15,000 shares @ $19.32 per share)
- Board member Sophie L’Helias (8,500 shares @ $19.48 per share)
Combined, the insiders bought a little over $455,000 worth of stock.
High-Conviction Trades
What stands out here is that both insiders have increased the size of their holdings significantly with these trades.
Mr. Mulligan has increased the size of his holding from 15,000 shares to 30,000 shares – an increase of 100%. Meanwhile, Ms. L’Helias has increased the size of her holding from 8,560 shares to 17,060 shares – an increase of 99%.
This suggests that they are quite confident that the stock is set to move higher.
It’s worth noting that both of these insiders have financial experience. Previously, Mr. Mulligan was CFO of General Mills while Ms. L’Helias was a Managing Director at a hedge fund.
Better-than-expected Q4 Results
Herbalife’s share price recently surged after the company posted better-than-expected Q4 results.
While revenue for the quarter was down 10.4% (-5.4% at constant currency) year on year to $1.18 billion, it was above the consensus forecast of $1.13 billion, helped by higher pricing. Adjusted earnings per share came in at 53 cents – well above analysts’ estimate of 34 cents.
Looking ahead, the company said that it expects to see improving metrics in 2023 thanks to increased engagement with distributors. It also advised that it expects to deliver annual savings of at least $70 million in 2023 and 2024 as its Transformation Program pays off.
“We anticipate the energy and engagement being generated at our in-person events will translate to improving metrics in 2023,” said Chairman and CEO, Michael O. Johnson. “Since taking on the CEO role, we have aligned with our distributors behind strategies and objectives to refresh and vitalize the Company, in order to return to growth,” he added.
The recent insider buying activity suggests that those within the company see further share price upside.
We view this insider buying as a bullish development.
