Insider Buying

2iQ Insider Brief: Flatex AG (FTK: GR) Wallbridge Mining (WM: CN) Greif Inc (GEF: US)

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Flatex AG (FTK: GR)

12-month performance: +50%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including Chairman/CEO and CFO
Recent news: Acquired brokerage company Degiro

Flatex AG, formerly known as Fintech Group, is a German company that operates in the financial technology industry. Specialising in securities trading and transaction processing, its goal is to build Europe’s largest provider of financial technology. The stock is listed on the XETRA and currently has a market capitalisation of €497 million.

We last covered Flatex in January 2019, when it was trading at around €18. At the time, we noticed that four top-level directors had recently purchased shares and we said that, in our view, the stock had upside potential. Fast forward to today, and the shares have climbed to €25 on the back of good results last year and a number of exciting deals including the acquisition of European brokerage company Degiro in December.

first-3                  Source: 2iQ Research

Looking at insider transaction activity, we think the stock has the potential to keep rising. We say this because since mid-December a number of directors have acquired shares, including Chairman and CEO Frank Niehage, CFO Muhamad Chahrour, and multiple members of the Executive Committee. We view this pattern of insider buying as a bullish signal. With the company recently announcing that it expects to double its revenues within the next five years, and multiple insiders buying stock, we think the outlook for Flatex is favourable.

Wallbridge Mining (WM: CN)

12-month performance: +463%
Insider activity: Bearish
Selling pattern: Sales from multiple directors including CEO, Chairman, and 10% owner
Recent news: Results from drill programme

Wallbridge Mining is a Canadian company that is engaged in the discovery, development, and production of gold, copper, nickel and platinum group metal mineral deposits. The group is predominantly focused on the development of its Fenelon Gold property in north-western Quebec, however, it also has operations in Jamaica and British Columbia. The stock is listed on the Toronto Stock Exchange and currently has a market capitalisation of CAD $530 million.

Wallbridge Mining shares nearly tripled in the fourth quarter of 2019 after the group reported assay results from the ongoing drill programme at its Fenelon Gold property. Of particular note was drill hole FA-19-086, which returned 27 g/t Au over 38.39 metres, which the company says demonstrates the significant gold endowment of the system at depth. After beginning 2019 at CAD $0.16, the stock ended the year at CAD $0.91 – a rise of around 470%.

seconddd                  Source: 2iQ Research

Examining insider transaction activity, we think Wallbridge Mining shares warrant caution right now. We say this because throughout December a number of insiders reduced their exposure to the stock, which could be interpreted as a bearish signal. Those selling included President/CEO Marz Ford, Vice-President of Finance Mary Montgomery, Executive Chairman Alar Soever, 10% owner William Day Construction, as well as a number of independent directors. While major shareholder Eric Sprott did add to his holding during the month, acquiring an additional 13 million shares, we think the fact that so many insiders sold shares throughout the month is concerning. All things considered, we think Wallbridge Mining looks quite risky at present.

Greif Inc (GEF: US)

12-month performance: +25%
Insider activity: Bullish
Buying pattern: Large purchase from CFO
Recent news: Solid Q4 results

Greif is a leading provider of industrial packaging products and services that operates in more than 40 countries worldwide. The group produces steel, plastic, fibre, flexible, corrugated, and reconditioned containers, intermediate bulk containers, and containerboard and packaging accessories. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $2.3 billion.

We last covered Greif in mid-July when it was trading at around $34. At the time, the stock had just experienced a pullback due to trade war uncertainty, however, we noticed that multiple directors were buying shares, which is generally a bullish signal. Fast forward to today, and Greif shares have risen to $45 on the back of solid third-quarter and fourth-quarter results in the second half of 2019. In the third quarter, adjusted EBITDA was 39% higher than the comparable prior year period, while in the fourth quarter, adjusted EBITDA climbed 32%.

thirdoo                  Source: 2iQ Research

What’s interesting here is that CFO Lawrence Hilsheimer, who was acquiring stock in July when the share price was $34, has recently purchased more stock at a share price of just under $45. According to our records, on 16 December, the insider added another 3,863 shares to his personal holding, spending a total of $173,294 on stock. In our view, this purchase at a higher price is a bullish signal, as Hilsheimer is likely to have a good understanding of the company’s prospects. Given this large purchase, we think the stock has the potential to keep rising.

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