Insider Buying

2iQ Insider Brief: Essity Aktiebolag (ESSITYB: SS)

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Essity Aktiebolag (ESSITYB: SS)

12-month performance: +10%
Insider activity: Bullish
Buying pattern: Buying from multiple insiders including CFO
Recent news: Excellent Q1 results

Essity Aktiebolag is a global hygiene and health company headquartered in Stockholm, Sweden. The group’s products, which are sold in around 150 countries worldwide, include toilet paper and tissues, baby diapers, feminine care products, incontinence products, and wound care products. The company is listed on the Stockholm Stock Exchange and currently has a market capitalisation of SEK 214 billion.

We last covered Essity Aktiebolag in late March after we noticed that three insiders including President/CEO Magnus Groth had been buying ESSITYB shares. We saw the buying activity as a bullish signal. Since then, the company has issued an excellent set of Q1 results. For the quarter, net sales were up 7.8% on the same period last year, while adjusted EBITDA increased 67%. On the downside, Essity said that sales in future quarters could be impacted by the stockpiling seen in March. However, it also said that in the long term, the coronavirus pandemic may lead to increased demand for hygiene and health products due to a greater focus on hygiene.

essity chart-1                         Source: 2iQ Research

What looks interesting here is that insiders have continued to buy shares recently, despite the fact that the share price has rebounded by more than 15% since its March low. In late April, we observed purchases from five different insiders, including CFO Fredrik Rystedt and two other members of the senior management team. Rystedt paid SEK 318 per share for his shares – close to the stock’s all-time high. In our view, this pattern of cluster buying – where a number of insiders are buying stock within a short space of time – is a bullish signal. The fact that multiple insiders have had the confidence to purchase shares near all-time highs suggests that the stock could still be undervalued.