Insider Buying

2iQ Insider Brief: Expedia Group Inc (EXPE: US) OneSavings Bank (OSB: LN) Photo-Me International PLC (PHTM: LN)

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Expedia Group Inc (EXPE: US)

12-month performance: -3%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including Vice Chairman
Recent news: Weak Q3 results

Expedia Group is a travel company that owns a number of online travel brands including Expedia, Trivago, Hotwire, ebookers, and Overall, the group owns over 200 travel booking websites in more than 70 countries. The stock is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $16.4 billion.

Expedia shares took a large hit in early November after third-quarter earnings missed estimates. Blaming weaker search engine traffic, reduced prices at hotels, and higher marketing costs, the group reported adjusted earnings per share of $3.38, well below the consensus estimate of $3.80 and 7% lower than earnings in the same period last year. The group also lowered its guidance for full-year EBITDA. However, the stock has rebounded recently after the group announced on 4 December that both CEO Mark Okerstrom and CFO Alan Pickerill would be leaving the company immediately. In a memo to Expedia employees, Chairman Barry Diller said: “The board made this change to Expedia’s leadership because we disagreed on strategy with the departing senior executives.”

first expedia               Source: 2iQ Research

What’s interesting here is that immediately after it was announced that the CEO and CFO would be leaving the company, two directors, including Vice Chairman Peter Kern, purchased a large amount of stock. According to our records, on 5 December, Jon Gieselman purchased $250,000 worth of shares, while on 6 December, Kern spent $2.5 million on stock. It’s also worth noting that in late November another director, Samuel Altman, purchased $2.0 million worth of shares. These purchases suggest that Kern, Gieselman, and Altman expect the stock to recover from its recent pullback. With that in mind, we think EXPE offers a favourable risk/reward proposition right now.

OneSavings Bank (OSB: LN)

12-month performance: +29%
Insider activity: Bearish
Selling pattern: Sales from multiple directors including CEO, CFO, and COO
Recent news: Solid trading update

OneSavings Bank is a UK challenger bank. A specialist lender, OneSavings is focused on selected sub-sectors of the mortgage market including buy-to-let, commercial and semi-commercial, and shared ownership. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £2 billion.

OneSavings Bank shares have had a good run since the beginning of September, rising from around 320p to 430p. The shares have been boosted by a good trading update in mid-November, in which the group advised that it achieved loan book growth of 15% in the first nine months of the year, and also by the result of the recent UK general election, which has created more certainty for UK businesses.

second fff               Source: 2iQ Research

Looking at insider transaction activity, we think it’s slightly concerning that a number of OneSavings Bank directors have sold shares as the OSB share price has climbed higher recently. Since 9 December, we have observed large sales from CEO Andrew Golding (250,000 shares), CFO April Talintyre (100,000 shares), and COO Clive Kornitzer (34,000 shares), as well as a large sale from Charter Court Financial Services Group (which OneSavings recently acquired) COO John Nixon (785,581 shares). In our view, this selling pattern looks quite bearish. As such, we think caution is warranted towards OneSavings Bank shares right now.

Photo-Me International PLC (PHTM: LN)

12-month performance: +9%
Insider activity: Bullish
Buying pattern: Large purchase from CEO
Recent news: Solid half-year results

Photo-Me International operates, sells and services a wide range of instant service vending equipment, including photobooths and integrated biometric identification solutions, laundry units, and digital printing kiosks. Operating in 18 countries worldwide, the group has nearly 50,000 vending units in operation. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £368 million.

Photo-Me issued a solid set of half-year results on 10 December. For the 6-month period, revenue rose 3.3%, while EBITDA increased 17.4% and profit before tax increased 8.8%. Describing the group’s performance as “robust,” CEO Serge Crasnianski said that the Board remains confident that Photo-Me will continue to perform in line with market expectations for the current financial year.

third-2               Source: 2iQ Research

Examining insider transaction activity, we think it’s interesting that Crasnianski – who first joined the company back in 1990 – purchased £1.04 million worth of Photo-Me shares immediately after the group’s recent half-year results. This suggests that he is confident about the future. Given that a company’s CEO tends to have better insight into that company’s future prospects than anyone else, we see this purchase as a bullish signal.