2iQ Insider Brief: Loxo Oncology (LOXO:US) Iliad SA (ILD:FP) Buzzi Unicem Spa (BZU:IM)

Robert Hable 2 October 2018

Loxo Oncology (LOXO: US)

12-month performance: +105%
Insider activity: Bearish
Buying pattern: Multiple directors selling including CEO
Recent news: Presented details on new drug

Founded in 2013, Loxo Oncology is a biopharmaceutical company that is focused on developing treatments for people with cancers that are caused by single gene abnormalities. The group has a pipeline of purpose-built, targeted medicines that are designed to address this form of cancer, with its drug Larotrectinib, formerly referred to as LOXO-101, currently being reviewed by the FDA. The stock is listed on the Nasdaq and currently has a market capitalization of USD $5.2 billion.

Loxo shares surged over 40% in May after the group announced that it would be discussing details of its new drug, LOXO-292, at the American Society of Clinical Oncology (ASCO) annual meeting in early June. The last time the company presented at this meeting in 2017, it announced impressive results for its Larotrectinib drug. And Loxo didn’t disappoint this year, with the data on LOXO-292 demonstrating robust efficacy and safety. So, with a potentially exciting future ahead, is now a good time to be buying stock in Loxo Oncology?

Loxo Oncology

Source: 2iQ Research

Analysis of insider transaction activity here actually reveals quite a bearish pattern. Since June, we have seen consistent selling from CEO Joshua Bilenker, Chief Business Officer Jacob Van Naarden, and also Senior Vice President of Finance Jennifer Burstein. Between them, these top-tier directors sold over $5 million worth of stock in September alone. It’s also worth noting that private equity firm Aisling Capital recently dumped $251 million worth of stock. Given this intense selling activity, we believe the stock should be avoided for now.

Iliad SA (ILD: FP)

12-month performance: -49%
Insider activity: Bullish
Buying pattern: Purchases from CEO and Deputy CEO
Recent news: Multiple broker downgrades

Iliad is a French telecommunications company that provides internet access, telephone services, television services and hosting services. As of December 31, 2017, the group had approximately 6.5 million broadband subscribers and 13.7 million mobile subscribers. Listed on the Euronext, the stock currently has a market capitalization of €6.8 billion.

Iliad shares have performed poorly over the last 12 months, declining nearly 50%. This year, the group has lost a large number of mobile and broadband subscribers and as a result, profits have been weaker than expected. In September, Barclays, HSBC and Morgan Stanley all reduced their price targets for the stock, with the latter commenting that Iliad’s 2020 outlook looks “very optimistic.” Is the stock best left alone then?

Iliad SA

Source: 2iQ Research

What’s interesting here is that in September, we have seen a purchase from CEO Maxime Lombardini and multiple purchases from Deputy CEO Xavier Niel. Niel’s purchases, in particular, stand out as they amount to over USD $90 million worth of stock, which would normally be interpreted as a bullish signal. However, looking further back, we see that Niel actually dumped large amounts of Iliad stock in April and May. As such, we have less conviction in the bullish signal generated by the recent purchases.

Buzzi Unicem Spa (BZU: IM)

12-month performance: -18%
Insider activity: Bullish
Buying pattern: Multiple purchases from insiders
Recent news: Announcement of share buyback

Buzzi Unicem is an Italian construction materials company that specializes in the production, distribution and sale of cement, ready-mix concrete and natural aggregates. Headquartered in Casale Monferrato, Italy, the group has operations in Italy, the US, Germany, Luxembourg, the Netherlands, Poland, the Czech Republic, Slovakia, Ukraine, Russia, and Mexico. The stock is listed on the Borsa Italiana and currently has a market capitalization of €3.5 billion.

Shares in Buzzi Unicem have fallen 19% this year, which is not surprising when you consider the political uncertainty within Italy in recent months. Indeed, Buzzi certainly isn’t the only Italian stock to fall in 2018 as the FTSE MIB Index is down approximately 12% since mid-May. Having said that, sentiment towards the company and the sector probably hasn’t been helped by the fact that the Italian Competition Authority (AGCM) fined 11 cement manufacturers, a cement distributor and a trade association more than €184 million in late 2017 for fixing prices and exchanging sensitive information, with Buzzi having to pay a fine of €60 million. However, with the company recently commencing a share buyback, is the stock now worth a closer look?

Buzzi

Source: 2iQ Research

Analysis of insider transaction activity here reveals a bullish pattern. During September, we have seen several stock purchases from Fimedi Spa, a company owned by Executive Chairman Enrico Buzzi, as well as several purchases from Veronica Buzzi, who has served as Non-Executive Vice Chairman of the Board since May 2011. Given that top level insiders are accumulating shares in the company, we believe the stock could be worth watching for a rebound.

 

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