Insider Buying

2iQ Insider Brief: Chr Hansen Holding A/S (CHR: DC) LafargeHolcim (LHN: SW) Tukas Gida Sanayi ve Ticaret AS (TUKAS: TI)

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Chr Hansen Holding A/S (CHR: DC) 

12-month performance: -4%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO
Recent news: Downgraded revenue guidance


Chr Hansen Holding is a Danish bioscience company that develops natural ingredient solutions for the food, nutritional, pharmaceutical, and agricultural industries. The company’s solutions enable food manufacturers to produce more with less, and also reduce the use of chemicals and other synthetic additives. The stock is listed on the OMX Nordic Exchange Copenhagen and currently has a market capitalisation of DKK 82 billion.

Chr Hansen shares plunged in June after the company unexpectedly downgraded its revenue outlook. Citing a weaker growth environment in the emerging markets and lower-than-expected growth momentum in its natural colours and animal health businesses, the group reduced its organic sales growth outlook for 2018/19 from 9%-11% to 7%-8%. Investors were clearly unimpressed with the guidance – the stock fell 14% on the news.


Source: 2iQ Research

Analysing insider transaction activity at Chr Hansen, we think investors may have overreacted to the recent revenue downgrade. We say this because in the days following the announcement four directors – including President/CEO Mauricio Graber – spent nearly US $600,000 on Chr Hansen shares, which suggests these insiders expect the shares to rebound. On top of that, major shareholder The Capital Group Companies increased its indirect holding of shares in the company from 9.99% to 10.37% which we see as another bullish signal. While the stock has received a downgrade from JP Morgan since the revenue guidance update, we think it has rebound potential given the recent insider activity.


LafargeHolcim (LHN: SW)

 12-month performance: 0%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO
Recent news: Solid Q1 results


LafargeHolcim is a leading global building materials and solutions company that serves masons, builders, architects and engineers. Operating in over 90 countries, the company is the largest cement producer in the world. The stock is listed on the SIX Swiss Exchange and currently has a market capitalisation of CFH 30.1 billion.


After trading as high as CHF 54 in mid-May, LafargeHolcim shares have pulled back recently. Despite the fact that the first-quarter results were solid – sales were up 2.2% and operating profit rose 16% – and the company confirmed its 2019 targets, investors have taken profits and the stock has fallen back to the CHF 48 mark.


Source: 2iQ Research

What we think is interesting about LafargeHolcim is that since early June three top-level directors have purchased large quantities of company stock. Those buying have included CEO Jan Jenisch, who recently bought 31,000 shares for a total cost of nearly US $1.5 million, General Counsel Keith Carr, who spent around US $110,000 on shares, and Head of Middle East and Africa Miljan Gutovic, who spent nearly US $145,000 on shares. We see this buying activity as bullish, as these insiders are likely to have an excellent understanding of the group’s future prospects. With the company showing that it has solid momentum at present, and multiple directors buying shares, we think the outlook for LafargeHolcim is favourable.


Tukas Gida Sanayi ve Ticaret AS (TUKAS: TI)

 12-month performance: +148%
Insider activity: Bullish
Buying pattern: Aggressive buying from Chairman
Recent news: Good Q1 results

 Tukas Gida Sanayi ve Ticaret AS (Tukas) is a food manufacturer that is based in Turkey. The group’s portfolio includes more than 100 food products, including tomato pastes, canned vegetables, and sauces. The stock is listed on the Istanbul Stock Exchange and currently has a market capitalisation of TRY 1.2 billion.


Despite a pullback over the last fortnight, Tukas shares have performed very well this year, rising from TRY 1.66 to TRY 4.27 – a gain of over 150%. The stock has been boosted by strong full-year results, in which net profit surged 465% to 35.6 million lira, and good first-quarter results, in which net profit jumped 179% to 11.7 million lira.

TUKAS_TISource: 2iQ Research

Looking at insider transaction activity at Tukas, we think the shares look interesting after the recent pullback. This is due to the fact that since late May we have observed aggressive buying activity from Chairman Cem Okullu who has spent nearly US $4 million on shares. We think this buying activity is worth noting for several reasons. Firstly, Okullu has purchased a large number of shares, which indicates he is bullish about the future. Secondly, the insider has been willing to pay up to TRY 5.10 for his shares – nearly 20% above the current share price. Thirdly, a look at Okullu’s trading history reveals that he has a good track record of timing his purchases and sales well – his 2iQ long-term trading IQ is a high 115. Putting this all together, we believe Tukas shares have the potential to keep rising.

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