Insider Buying

2iQ Insider Brief: BT Group (BT/A: LN)

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BT Group (BT/A: LN)

12-month performance: -47%
Insider activity: Bullish
Buying pattern: Purchases from multiple insiders including CEO and Chairman
Recent news: Disappointing full-year results

BT Group is a UK-based telecommunications company. The group is the largest provider of fixed-line voice and broadband services in the UK as well as the largest mobile network operator. The company is listed on the London Stock Exchange and currently has a market capitalisation of £10.1 billion.

BT recently issued a disappointing set of full-year results. For the year ending 31 March, revenue was down 2% to £22,905 million while basic earnings per share declined 20% to 17.5p. The company also suspended both its final dividend for 2019/20 and all dividends for 2020/21 in an effort to free up cash. However, there were some positives from the results. Not only did the group advise that it completed its £1.6 billion phase 1 transformation programme one year ahead of schedule, but it also said that it is commencing a “radical modernisation and simplification programme” that will use technology to create a better company. This is expected to deliver gross annualised savings of £2 billion over the next five years.

bt group chart                       Source: 2iQ Research

BT shares have fallen by nearly 50% this year and we think it’s interesting that a number of top-level insiders have been buying stock at lower prices recently. On 13 May, both CEO Philip Jansen and Chairman of the Board Jan du Plessis added to their holdings, spending a total of £2.5 million on stock, while on 12 May, two Non-Executive Directors, Matthew Key and Iain Conn, also added to their personal holdings. It’s worth noting that Jansen’s purchase boosted his holding by 52%, while du Plessis’ purchase increased his holding by 165%. In our view, this pattern of insider buying looks quite bullish. It suggests that insiders think that they can turn the company around and that they believe the share price is undervalued right now.