2iQ Insider Brief: OXIG, MAXR, SWMA

A brief look into insider buying and selling by 2iQ Research, the leading provider of insider transactions data to the investment community. Our bi-weekly Insider Brief highlights a small number of companies whose directors' transactions flag potential risks and opportunities for investors.


Swedish Match AB (SWMA:STO)
12 months performance: bullish
Insider activity: bullish
Buying pattern: multiple - CEO, CFO, near 52 week high
Recent earnings announcement: very good

Swedish Match AB shows bullish performance following the recent acquisition of V2 Tobacco in September 2017 and the latest recent FY 2017 announcement. Basic EPS from continuing operations was at 17.56 SEK, surpassing the baseline expectation of 16.32. The adjusted beta was 0.55 lower than Imperial Brands PLC and British American Tobacco. Following the earnings announcement, both the CEO Lars Dahlgren (on 20/02/2018) and the CFO Marlene Forsell (on 28/02/2018) bought a total of 4,250 shares for a weighted average price of 339 SEK, worth a total of 179,390 USD. This is the first buy of this magnitude since Q2 2014.

Both the CEO and the CFO have extensive experience in the tobacco industry. Mr Dahlgren was on the board of directors of Scandinavian Tobacco Group AS from 2010 to 2016. As of the 9th March 2018, Ms Forsell is no longer with the company. She has extensive expertise in financial matters, having previously served as vice president of Group Reporting for Swedish Match AB; vice president of Business Control at Swedish Match Smokefree Division; vice president of Corporate Control, Swedish Match AB and an analyst at Ernst & Young. She is a board member of Scandinavian Tobacco Group AS.

For the past month the stock has been outperforming its brand peer group (Imperial Brands PLC, Karelia Tobacco Company and Scandinavian Tobacco) by 20%. Furthermore the company has made two new issues of debt at a total of just under 153 million USD to finance expansion projects. The stock is definitely worth following.


Maxar Technologies Limited (MAXR:US)
12 months performance: bearish
Insider activity: bullish
Buying pattern: multiple - CEO, CFO, near 52 week low
Recent earnings announcement: relatively poor

Maxar Technologies’ stock has been under pressure in the past month due to the latest earnings announcement published on 27th February. The EPS fell short of analyst estimates which has put a downward pressure on the stock’s price leading to a 20.5% drop during the last week of February. Following the price drop numerous insiders have made on-market purchases, among others the CEO, CFO and chairman of the company. The total purchases amount to slightly over 1.2 million USD. Similar purchases were observed during Q1 and Q2 in 2017 after stock price fell by roughly 30% for the period 08/2016 to 06/2017. CFO Mr Anil Wirasekara bought three thousand shares for an average price of 62.876 CAD on 18th May 2017. By the end of the year the price had increased by 35.73% making him approximately 51,118 CAD. In the past Mr Wirasekara’s purchases have been very successful with an average outperformance of 6% annualized.

Anil Wirasekara has been with the company since 1992, serving as manager of operations, Information and Financial Management. He has held various financial positions in different companies including Ernst & Young. CEO Mr. Howard Lance joined the company in 2016. He previously served as executive advisor in private equity at Blackstone Group.

Maxar leads the field in space robotics and remains number one in big data analytics for the space business, with NASA, the US Air Force and Google among its customers. The company has a very high leverage with 12.32 Debts/EBITDA compared to an average of 3.5 among its peers. Maxar recently detailed a five year deleveraging policy which may offset this.

On a conventional metric the company appears undervalued, with a forward P/E of 11.29, the lowest in its peer group which has an average of 26. The best performer in the company’s portfolio during the last year was big data and analytics with a revenue growth of 10%, driven by the recent 2.4 billion USD merger between MacDonald, Dettwiler and Associates and Digital Global, the industry leader in commercial satellite imagery.


Oxford Instruments PLC (OXIG:LON)
12 months performance: bearish
Insider activity: bullish
Buying pattern: multiple; CEO; CFO, near 52 week low
Recent earnings announcement: poor

The company has suffered a protracted period of poor share performance since Q1 2017, culminating in a substantial drop of 36% during the last three months. Meanwhile, competitors Hexagon AB and Spectris PLC have experienced substantial increases of 18% and 24% respectively. Even though the revenue growth has been flat over the past three quarters, the falling cost of goods sold has overcompensated, leading to increased profit margins. The EBITDA margin (based on Q4 2017) is the largest in the peer group - 33.55% against a median of 19.6%. On a relative basis the stock seems to be undervalued - the one year forward P/E is slightly over 13. The median for the peer group is 19.5.

On 1st March three top level executives - the CEO, CFO and chairman - purchased stock in the company for a total value of 182,084 USD. We have never before observed such high value insider purchases at this company. Mr Alan Matthew Thomson, chairman of the company, has rich experience in industrial companies. He currently serves as non-executive chairman at Hays PLC and independent director at Alstom SA. His past purchases at Hays have proven generally successful - the one year outperformance is at 3.9%. CEO Dr Ian Barkshire and CFO Mr Gavin Hill were both appointed in 2016. These on-market purchases are a first for both of them. Dr Ian Barkshire has broad scientific background in physics and holds a PhD from the University of York.

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