Elisa Oyj (ELISA: FH)
12-month performance: +35%
Insider activity: Bearish
Selling pattern: Large sale from CEO
Recent news: Good Q1 results
Elisa Oyj is a Finnish company that is engaged in the provision of Information and Communication Technology (ICT) services in Finland and Estonia. Operating through a number of subsidiaries including Elisa Appelsiini, Elisa Santa Monica Oy, and Kepit Systems Oy, the group serves nearly three million customers. The company is listed on the OMX Nordic Exchange - Helsinki and currently has a market capitalisation of €9.0 billion.
Elisa recently issued a good set of Q1 results. For the quarter, revenue increased 6%, while EBITDA climbed 5%. However, the company advised that the coronavirus pandemic has increased uncertainty going forward. It said that a prolonged duration of the pandemic may significantly contribute to a slowdown in economic growth and that this may have negative effects on the company due to lower customer demand. It also said that it faces intense competition in the areas it operates in.
Source: 2iQ Research
After falling nearly 30% when equity markets tanked in February and March, Elisa shares have rebounded recently and we think it’s interesting that CEO Veli-Matti Mattila has taken the opportunity to offload a large proportion of his holding after the rebound. On 12 May, the insider sold 50,000 shares at a price of €55.12 per share, netting proceeds of just under €2.8 million. This sale reduced his stake by nearly 40%. Now, of course, there are many reasons why insiders sell stock. In this case, perhaps Mattila – who turns 60 next year – is thinking ahead to retirement. However, given that the stock has had a strong run over the last 12 months and now trades at a premium of about 60% to its sector (the highest premium it has traded at in many years), we believe an element of caution is sensible here. With the CEO offloading a large proportion of his holding, we think there’s risk to the downside.