12-month performance: +2% Insider activity: Bullish Buying pattern: Buying from multiple directors including CEO, Finance Director, and COO Recent news: Purchased 12 premium hotels
American Hotel Income Properties (AHIP) is a Canadian property company that invests in hotel real estate properties primarily in the United States. Its objective is to generate stable and growing cash distributions from its hotels while also maximising the value of its hotel portfolio through active management. The stock is listed on the Toronto Stock Exchange and currently has a market capitalisation of CAD $534 million.
After announcing in late July that it would be selling its economy lodging portfolio of 45 hotels for $215.5 million, AHIP announced on 28 November that it had reached a definitive agreement to acquire 12 premium branded hotels for $191 million. The 12 hotels in the acquisition include six Marriott-branded properties, five Hilton-branded properties, and one IHG-branded property. “We’re very excited to complete a significant component of our 2019 capital recycling program by adding these 12 high-quality, mostly all-suite focused, recently built select-service hotels to our portfolio of premium-branded hotels,” said AHIP CEO John O’Neill. “We continue to believe higher-quality properties and attractive financing terms will drive better risk-adjusted FFO accretion and create value for our unitholders over the long term,” he added.
Source: 2iQ Research
What’s interesting here is that, immediately after AHIP announced that it had reached an agreement to acquire the 12 premium branded hotels, six separate directors purchased shares in the company, including CEO John O’Neill, Finance Director Anne Yu, and COO Bruce Pittet. This indicates that these insiders believe that the new hotels will add value. Given this bullish insider activity, we think the stock has the potential to rise.
Cubic Corporation (CUB: US)
12-month performance: +13% Insider activity: Bullish Buying pattern: Buying from multiple directors including CEO and CEO Recent news: Q4 profit miss
Cubic Corporation is an American company that provides specialist solutions to the defence and transportation industries. Operating in 24 countries, the group employs around 5,500 people. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $2 billion.
Cubic’s share price fell from $74 to $58 on 21 November after the company’s fourth-quarter profits came in below market expectations. For the quarter, the group generated adjusted earnings per share of $1.86, below the consensus forecast of $1.94. However, the Q4 results were not a complete disaster – sales came in $471.2 million, comfortably above the consensus forecast of $440.3 million.
Source: 2iQ Research
Looking at insider transaction activity, we think investors may have overreacted to the recent Q4 profit miss. We say this because since Cubic issued its results six separate directors have stepped up to purchase shares, including the company’s Chairman, President and CEO Bradley Feldmann, and its CFO Anshooman Aga. This suggests that these directors are confident about the future. Given this insider buying, we expect the shares to rebound.
Scandic Hotels Group AB (SHOT: SS)
12-month performance: +14% Insider activity: Bullish Buying pattern: Purchase from CEO Recent news: Good Q3 results
Scandic Hotels Group is a Swedish hotel operator. Founded in 1963, the company has grown to become the largest hotel operator in the Nordic region with a network of 280 hotels in six countries. The stock is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalisation of SEK 9.2 billion.
We last covered Scandic Hotels Group in mid-May when the stock was trading under SEK 80. At the time, the shares had recently fallen after the company reported Q1 results that were below market expectations. However, we noticed that six top-level directors had been purchasing stock, which in our view was bullish. Fast forward to today, and Scandic Hotels Group shares have rebounded to SEK 90 after the group reported its highest-ever adjusted EBITDA in the third quarter.
Source: 2iQ Research
Examining insider transaction activity, we think Scandic Hotels Group shares have the potential to keep rising. We say this because earlier this week President and CEO Jens Mathiesen purchased another 13,500 shares in the company at a price of SEK 88 per share. This increased his personal holding by nearly 30%. Given that Mathiesen is likely to have an excellent understanding of the company’s future prospects, we see this purchase as a bullish signal.
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