2iQ Insider Brief: HBI:US, CUTR:US, EFN:CN

Patrick Hable 25 May 2018

Hanesbrands Inc (HBI: US)

12-month performance: -10%
Insider activity: Bullish
Buying pattern: Multiple directors including CEO and CFO 
Recent news: Lowered earnings guidance for 2018

Hanesbrands Inc. is a consumer goods company that designs, manufactures and sells men’s and women’s basic apparel. Since mid-September, Hanesbrands shares have fallen nearly 30% on the back of disappointing performance figures and lower earnings guidance for 2018.

A share price decline is not uncommon when a company lowers its earnings guidance, yet, after such a significant fall since September, are Hanesbrands shares now worth a closer look?

HBI-USIn recent weeks, we have seen buying activity from both the CEO and CFO, as well as two other directors. The fact that multiple directors are buying could be interpreted as a bullish indicator, especially when you consider that the two most important insiders, the CEO and the CFO, are involved. Given that the CEO and the CFO generally have the most intimate knowledge of a company’s performance and its future prospects, Hanesbrands could be a stock to keep a close eye on going forward.Analysis of recent director buying activity suggests they might be.

Cutera Inc (CUTR: US)

12-month performance: +70%
Insider activity: Bullish
Buying pattern: Multiple directors including President/CEO after sudden share price drop
Recent news: Q1 results missed expectations

$510m market cap Cutera Inc is a global medical device company that specializes in the design, development and manufacture of laser and other energy-based aesthetic systems. Between November 2016 and mid-March this year, Cutera shares enjoyed a powerful rally, rising 330%, from $13 to $56. However, the market wasn’t impressed with recent Q1 results, released on 9 May 2018, with the stock falling nearly 40% in the space of just two days. Has that share price drop provided a buying opportunity or should investors steer clear?

CUTR-US

A glance at insider transaction activity reveals an interesting pattern. Just days after the recent share price fall, three different directors purchased shares in the company, including President/CEO James Reinstein, who bought just under $100,000 worth of stock at a price of $35.55 per share. When multiple directors are buying a company’s shares, investors should take note, especially when a key insider such as the President/CEO is involved. This suggests that the outlook for Cutera shares could be positive. The shares have already begun to move back up again.

Element Fleet Management CP (EFN: CN)

12-month performance: -47%
Insider activity: Bullish
Buying pattern: Large number of directors including Acting CEO and soon-to-be CEO after recent share price weakness
Recent news: CEO retired, weak results

Headquartered in Toronto, Element Fleet Management is a global fleet management solutions company, providing fleet services for cars, light-duty vehicles, trucks, and material handling equipment. It is the largest publicly-traded fleet management company in North America.

Element Fleet Management shares have fallen significantly over the last three years, with a notable 30% drop on the 6th of February this year, after the group announced that CEO Bradley Nullmeyer was stepping down, and that going forward, it would be continuing to execute its current strategy. The market was clearly unimpressed with the news. Weak results, released on 15th March, saw the stock fall even further. It’s now down nearly 50% from a year ago. Is it time for value investors to take a closer look?

EFN-CN

An analysis of recent director buying at Element reveals a bullish trade setup. Between the 16th and the 23rd of May, eight different directors purchased stock. That kind of intense ‘cluster’ buying is a very bullish signal. Furthermore, the fact that key insiders such as acting CEO Daniel Jauernig, soon-to-be CEO Jay Forbes and ex-Chairman William Lovatt all bought shares, is another bullish indicator. Forbes’ purchase was worth over $900,000, while Jauernig’s purchase more than tripled his holding. With this level of insider activity in mind, Element shares may be worth a closer analysis.

 

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