2iQ Insider Brief: CLG:LN, DOM:SS, OPK:US

Patrick Hable 13 August 2018

Clipper Logistics PLC (CLG: LN)

12-month performance: -27%
Insider activity: Bullish
Buying pattern: Purchases from CEO and CFO after sharp drop in share price
Recent news: Preliminary results on 30 July disappointed the market

Clipper Logistics provides bespoke logistical services to retail clients in the UK, counting world-class companies such as British American Tobacco, H&M, ASOS and John Lewis among its clients. The stock was listed on the London Stock Exchange in May 2014 at an IPO price of 100p.

Benefitting from the rise in online shopping, the company has grown at a prolific pace in recent years with revenue rising from £235 million in FY2015 to £400 million for FY2018, a compound annual growth rate (CAGR) of 19.4%.

Until recently, Clipper shares had enjoyed a strong run, with the stock rising to 470p in January this year, a significant gain on the 100p IPO price. However, the stock has struggled in 2018, drifting lower during the volatility in February and March and then plummeting over 20% on FY2018 preliminary results, released on 30 July.

Despite revenue increasing 17.6% for the year and earnings and dividends per share rising 13.6% and 16.7% respectively, investors were unimpressed that the results missed analysts’ expectations. A comment from Executive Chairman Steve Parkin that the group was mindful of “headwinds” in the retail sector may have also spooked investors.

Clipper LogisticsSource: 2iQ

Yet after a share price fall of approximately 25% since late July is the stock now worth a closer look? Analysis of recent insider transaction activity suggests it may be.

On 30 July, both CEO Tony Mannix and CFO David Hodkin purchased sizeable amounts of stock in the company. Hodkin’s purchase is of particular note, as not only was it worth USD $1.0 million, but it also boosted his stock holding by almost 30%. Our data shows that both Mannix and Hodkin have high long-term trading IQs, suggesting that they have timed their purchases well in the past. These director purchases send out a positive signal about the future prospects of the company. As a result, we believe Clipper Logistics shares are worth monitoring closely going forward.

Dometic Group AB (DOM: SS)

12-month performance: +24%
Insider activity: Bullish
Buying pattern: Large purchases from the President/CEO and Chairman
Recent news: Strong Q2 results

Headquartered in Solna, Sweden, Dometic Group provides solutions for mobile living. The group manufactures and sells a broad range of products designed for recreational vehicles, trucks and boats and specializes in climate control, power generation, and hygiene products. Operating in the Americas, EMEA and Asia Pacific, Dometic had net sales of SEK 14 billion in 2017. 

Dometic shares have performed well over the last 12 months, rising 24%, which is not surprising when you look at the group’s financial performance. For the second quarter of 2018, net sales rose 33% on the same period last year to SEK 5,260 million, while earnings per share also jumped 33% on Q2 2017 to SEK 2.13.

Yet looking at recent insider transaction activity, we believe there could be more upward share price momentum to come. Recently, President and CEO Juan Vargues bought four separate parcels of shares for a total consideration of around USD $4.4 million, which clearly sends a bullish signal to the market.

Dometic GroupSource: 2iQ

Vargues commented: "I have now been at Dometic for more than six months, and see an incredible potential in the company. The fact that I am now increasing my ownership in Dometic is based solely on being convinced that we will continue building our leading position and create a larger and more efficient company in the coming years.”

On top of this large CEO buy, we’ve also recently seen a purchase from Chairman of the Board Fredrik Cappelen, who has a good track record of timing his purchases well. With that in mind, we think the outlook for Dometic Group shares looks promising.

OPKO Health Inc (OPK: US)

12-month performance: -11%
Insider activity: Bullish
Buying pattern: Large purchases from Chairman/ CEO
Recent news: Draft local coverage determination (LCD) issued over the group’s highly-anticipated 4Kscore diagnostic test.

OPKO Health is a medical test and medication company that specializes in diagnostics and pharmaceuticals. The company’s diagnostic segment operates Bio-Reference Laboratories, a clinic laboratory that specializes in the diagnosis, monitory and treatment of diseases, while the group’s 4Kscore product tests for prostate cancer. Its pharmaceutical unit offers Rayaldee, a treatment for chronic kidney disease.

Shares in OPKO Health have performed poorly in the medium term as the company has generated poor sales figures, spent heavily on research and development and racked up sizeable operating losses. Over one year, the stock is down 11%. Over three years, it’s down nearly 60%.

However, after bottoming out at around USD $3 in mid-April, the shares have bounced quite significantly, almost doubling in price over the last four months. Is now the time to take a closer look?

An analysis of insider transaction activity certainly looks interesting. Recently, we have seen persistent levels of buying activity from Chairman of the Board and CEO Philip Frost, which is a bullish signal. The key insider registered eight separate stock purchases in July, totalling around USD $1.4 million, which followed on from his 11 purchases in June totalling approximately USD $750,000 and his 10 purchases in May which cost him around USD $1.4 million.

OPKO HealthSource: 2iQ

Frost’s intense buying activity suggests that he’s confident in the outlook for the company. With the share price showing signs of a rebound, OPKO could be worth keeping a close eye on in the near term.

 

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