Insider Buying

2iQ Insider Brief: AstraZeneca PLC (AZN: LN) Jupiter Fund Management (JUP: LN) Akzo Nobel NV (AKZA: NA)

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AstraZeneca PLC (AZN: LN) 

12-month performance: +7%
Insider activity: Bullish
Buying pattern: Buying from multiple directors including CEO and CFO
Recent news: Good Q1 results

 AstraZeneca is a global pharmaceutical company headquartered in Cambridge, UK. The Company focuses on three main therapy areas: oncology, cardiovascular & metabolic disease and respiratory, while also selectively pursuing therapies in autoimmunity, infection and neuroscience. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £75 billion.


Shares in AstraZeneca have enjoyed a strong run over the last three years under the leadership of CEO Pascal Soriot, rising from just under £40 in May 2016 to above £65 in March. However, after announcing a $3.5 billion placing in late March to help fund a breast cancer treatment collaboration with Daiichi Sankyo, the stock has corrected in the last two months, retreating back to the £57 level.


Source: 2iQ Research

 After the recent pullback in AstraZeneca’s share price, we think the investment case looks attractive. This is due to the fact that in the last two weeks five top-level directors have stepped up to purchase shares in the company, which suggests these insiders see value at current levels. Those buying have included CEO Soriot, who purchased nearly £1 million worth of stock on 29 April, and CFO Marc Dunoyer, who bought £493,000 worth of shares last week. With the company recently reporting Q1 results that beat expectations and a number of key insiders making significant purchases, we think the stock could be poised to move higher.


Jupiter Fund Management (JUP: LN)

 12-month performance: -19%
Insider activity: Bullish
Buying pattern: Large purchase from CEO
Recent news: Poor full-year results

 Jupiter Fund Management is a UK-based fund management company. A high-conviction active asset manager, Jupiter manages mutual funds, segregated mandates and investment trusts on behalf of individuals and institutions across the UK and internationally. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £1.6 billion.


Jupiter is experiencing a number of challenges at the moment. Not only has the group lost market share in recent years as passive investing has gained in popularity but recent equity market volatility has also had a negative impact on profitability, with pre-tax profit falling 7% last year. Additionally, the company is now being targeted by short-sellers, with short interest recently increasing to around 10%.


Source: 2iQ Research

What we think is interesting here is that despite the fact that short-sellers are targeting the stock, CEO Andrew Formica – who joined the company earlier this year from Janus Henderson where he was Co-CEO – has recently taken the opportunity to buy 140,000 shares in the company. That purchase, worth nearly £500,000, is a clear statement of confidence from the new CEO and suggests that he believes the company can turn things around. Non-executive director Roger Yates also bought 25,000 shares earlier this month for a cost of around £94,000. Given the challenges the asset management industry is facing right now, Jupiter is probably not going to turn things around overnight. Nevertheless, we think the stock is worth watching closely, given the bullish insider buying we have observed in recent weeks.


Akzo Nobel NV (AKZA: LN) 

12-month performance: +6%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, CFO and Chairman
Recent news: Q1 results missed expectations

 Akzo Nobel is a paint and coatings company based in the Netherlands. The company operates through two business segments: Decorative Paints and Performance Coatings, and its brands include Dulux, Coral, and Hammerite. The stock is listed on the Euronext - Amsterdam and currently has a market capitalisation of €16.8 billion.


Shares in Akzo Nobel performed well between January and March yet have pulled back recently after Q1 results were announced in late April. Despite the fact the group reported a 9% increase in adjusted operating income for the first quarter, along with a 5% rise in return on sales, the shares retreated as EBIT missed consensus expectations. Trading near €82 in mid-March, the shares currently trade for €74.


Source: 2iQ Research

Looking at insider transaction activity here, we think the recent pullback may have created a buying opportunity. We say this because since the Q1 results we have observed buying activity from a number of top-level directors, including CEO Thierry Vanlancker, CFO Maarten De Vries, and Chairman Nils Anderson. All three of these directors have purchased substantial amounts of stock around the €74-€77 mark, which we view as a bullish signal. With the company recently announcing a €2.5 billion share buyback, and top-tier directors buying significant quantities of stock, we think the outlook for Akzo Nobel is favourable.

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