Insider Buying

2iQ Insider Brief: DIC Asset AG (DIC: GR) Pason Systems (PSI: CN) Publity AG (PBY: GR)

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DIC Asset AG (DIC: GR)

12-month performance: +57%
Insider activity: Bullish
Buying pattern: Multiple purchases from holding company represented in the Board
Recent news: Strong Q3 results

DIC Asset is a German real estate holding company that focuses on investing in commercial real estate. Its property portfolio, which includes over 170 properties, has a market value of approximately €7.3 billion. The stock is listed on the XETRA and currently has a market capitalisation of €1.1 billion.

In late October, DIC Asset issued an excellent set of third-quarter results. For the nine-month period to 30 October, funds from operations (FFO) rose 40% on the year before, while profit for the period increased by 18%. Real estate management fees rose 69%. The group also advised that it was raising its 2019 full-year FFO forecast to €95 million, from €88 to €90 million.

first bullish                     Source: 2iQ Research

What looks interesting here is that recently, TTL Real Estate – another German real estate holding company – has purchased a significant quantity of DIC Asset shares. Since late October, TTL has spent nearly €30 million on DIC shares. The reason this is interesting is that Gerhard Schmidt, who is on the Supervisory Board at TTL, is also Chairman of the Supervisory Board at DIC Asset. Given this significant insider buying, we think the outlook for DIC Asset is favourable.

Pason Systems (PSI: CN)

12-month performance: -32%
Insider activity: Bearish
Selling pattern: Large sales from Chairman
Recent news: Weak Q3 results

Pason Systems is a global provider of instrumentation and data management systems for drilling rigs. Its solutions enable customers to collect, manage, report and analyse drilling data in order to optimise the performance and cost-efficiency of their operations. The stock is listed on the Toronto Stock Exchange and currently has a market capitalisation of CAD $1.1 billion.

Pason Systems issued disappointing third-quarter results in early November. Advising that its operating environment in North America had “deteriorated” during the quarter, the group reported a 12% drop in revenue and a 26% fall in EBITDA. Net income per share on a diluted basis decreased 36%. CIBC and the National Bank of Canada both cut their price targets for the stock after the results.

second bearish                    Source: 2iQ Research

Looking at insider transaction activity, we think Pason Systems is a stock to avoid. We say this because in the last month, Executive Chairman James Hill has sold a significant number of shares. In mid-November, the insider sold 500,000 shares at prices of between CAD $13.48 and CAD $13.95, while in early December, he sold another 500,000 shares at a price of CAD $12.85. Overall, he has sold around CAD $13.5 million worth of stock since mid-November. Given this insider selling, we think there is downside risk here.

Publity AG (PBY: GR)

12-month performance: +66%
Insider activity: Bullish
Buying pattern: Aggressive buying from CEO
Recent news: Strong H1 results

Publity is a German real estate investment company that has a focus on commercial and office properties in German metropolitan areas such as Frankfurt, Munich, Cologne, Hamburg and Leipzig. An established real estate investor, the group has sold over 600 German properties to date. The stock is listed on the XETRA and currently has a market capitalisation of €543 million.

We last covered Publity in April this year when the stock was trading near €29. At the time, the group had just announced that it would resume paying dividends, and we noticed that CEO Thomas Olek had recently increased his stake in the company from 3 million shares to 8.2 million shares. We saw this as a bullish signal. Fast forward to today and PBY shares trade at €37, having risen after the group issued a strong set of half-year results in September in which profit for the half year nearly eclipsed full-year 2018 profit.

third bull                    Source: 2iQ Research

Examining insider transaction activity here, we think it’s interesting that Olek has continued to aggressively purchase PBY shares in the last few months at higher prices. In November, he acquired another 350,000 shares, paying up to €40.10 per share. Overall, since our report in April, he has increased his position size by over 50%, from 8.2 million shares to 12.5 million shares. Considering that Olek is likely to have an excellent understanding of the company’s future prospects as CEO, we see his recent buying as another bullish signal.

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