Insider Buying

2iQ Insider Brief: Dalata Hotel Group plc (DAL: LN) Anglo Pacific Group plc (APF: LN) Elanco Animal Health (ELAN: US)

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Dalata Hotel Group plc (DAL: LN)

 12-month performance: -28%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and Deputy CEOs
Recent news: Solid half-year results

 

Dalata Hotel Group is a hotel operator that owns, leases and manages hotels throughout Ireland and the UK. Operating under two key hotel brands, Maldron Hotel and Clayton Hotel, the group is the largest hotel operator in Ireland with a portfolio of 39 three and four-star hotels. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £801 million.

We last covered Dalata Hotel Group in early December when the stock was trading near 400p. At the time, we noted that multiple directors were buying shares and we said that, in our view, the stock could be worth a closer look at that level. Interestingly, the shares rose to around 530p by early May, posting a gain of 30% in just five months. However, over the last four months the share price has fallen back to the 430p level on the back of Brexit uncertainty, despite the fact that the company’s 3 September half-year results were solid, with revenue rising 12% and adjusted EBITDA increasing 44%.

DAL_LNSource: 2iQ Research

Analysing insider transaction activity at Dalata Hotel Group, we think the recent share price weakness has created a buying opportunity. We say this because in the last week we have observed purchases from four top-level directors, including CEO Patrick McCann, Deputy CEOs Stephen McNally and Dermot Crowley, and Chairman John Hennessy. All of these insiders are likely to have a good understanding of the company’s prospects, so we interpret their purchases as a bullish signal. With the company recently lifting its interim dividend by 17%, and four insiders buying shares, we think the stock looks attractive right now.

 

Anglo Pacific Group plc (APF: LN)

 12-month performance: +30%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, CFO and Chairman
Recent news: Good half-year results

 

Anglo Pacific Group is a natural resources royalties company that owns a diverse portfolio of assets in low-risk jurisdictions. The only listed company in the UK that is focused on royalties connected with the mining of natural resources, its objective is to pay a substantial portion of the royalties it generates to shareholders as dividends. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £348 million.

 

Anglo Pacific Group shares have risen 30% so far this year, boosted by a number of strong trading updates. Recently, the group advised that revenue for the first half of the year jumped 64%, while cash generated from operating activities increased 78%. The company also said that the strong results for the first half of the year should lead to a full-year dividend increase of at least 12.5%, subject to market conditions and global volatility.

APF_LNSource: 2iQ Research

Looking at insider transaction activity, we think the stock has the potential to keep rising. We say this because since the start of September five directors have purchased shares in Anglo Pacific, which, in our view, is a bullish signal. Those buying have included CEO Julian Treger, CFO Kevin Flynn, and Chairman Nicolas Meier, who are all likely to strong insight into the group’s potential. With the company recently advising that the outlook for the remainder of the year remains positive, and multiple insiders buying shares, we think the outlook for the stock is favourable.

 

Elanco Animal Health (ELAN: US)

 12-month performance: -28%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Announced major acquisition 

 

Elanco Animal Health is a US-based company that develops, manufactures, and markets health products for animals. The company offers products in four categories: Companion Animal Disease Prevention, Companion Animal Therapeutics, Food Animal Future Protein & Health, and Food Animal Ruminants & Swine. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $10.1 billion.

 

Elanco Animal Health shares have fallen over the last month after it came to light in early August that the company was speaking to Bayer about acquiring its Animal Health Unit. The acquisition was finally agreed on 20 August with Elanco announcing that it will buy Bayer’s Animal Health assets in a cash and stock deal worth $7.6 billion. Despite the fact that the acquisition will create the second-largest animal health company in the world in terms of global revenue, the market does not seem impressed with the news, as the stock has fallen from $33 to $27 since early August.

ELAN_USSource: 2iQ Research

Looking at insider transaction activity, it seems that directors at Elanco believe the shares will rebound. Since the Bayer deal was announced, five directors have stepped up to buy shares in Elanco near the $27 mark, including CEO Jeffrey Simmons and CFO Todd Young, who bought $2.0 million worth of stock and $266,000 worth of stock respectively on 4 September. In our view, this is a bullish signal, as these directors are likely to have a good understanding of the company’s potential after the Bayer acquisition. Given this bullish buying activity, we think Elanco shares are worth a closer look after the recent share price fall.