Insider Buying

2iQ Insider Brief: Simply Good Foods Company (SMPL: US) Softcat PLC (SCT: LN) Lamda Development SA (LAMDA: GA)

featured image

Simply Good Foods Company (SMPL: US)

12-month performance: +24%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CFO
Recent news: Disappointing Q1 results

Simply Good Foods Company is a developer of nutritional foods. Its products include nutrition bars, ready-to-drink shakes, snacks, and confectionery products, and its brands include Atkins, SimplyProtein, and Atkins Endulge brand. The company is listed on the NASDAQ Capital Market and currently has a market capitalisation of $2.4 billion.

Simply Good Foods shares fell 10% on the 9th January after the group issued results for the 13-week period ending 30 November 2019. Investors didn’t like the fact that operating costs surged during the quarter and that the company generated a net loss of $4.8 million for the period compared to net income of $15.3 million last year. However, the results weren’t all bad. Not only did the company report a 26% increase in sales for the quarter, but it also advised that it anticipates 2020 adjusted diluted earnings per share to be in the range of $0.90 to $0.95. That would represent an increase of 17% to 23% on last year.

one1                    Source: 2iQ Research

What looks interesting here is that earlier this week, three directors took advantage of the lower share price and purchased shares in the company. This included CFO Todd Cunfer, who spent $116,503 on stock, and board member Nomi Ghez – who was previously a senior banker in the consumer sector with Goldman Sachs and has over 30 years’ experience working with consumer companies – who spent $495,159 on stock. This suggests that these insiders are confident about the future and expect the stock to bounce back. It’s also worth noting that late last year, both President and CEO Joseph Scalzo and Chairman James Kilts bought a significant quantity of SMPL shares. Given that multiple insiders have purchased shares recently, we think the stock is likely to rebound in the near future.

Softcat PLC (SCT: LN)

12-month performance: +24%
Insider activity: Bearish
Selling pattern: Sales from multiple directors including Managing Director, CFO, and Chairman
Recent news: Good full-year results

Softcat is a UK-based technology company that provides IT solutions to the corporate and public sector markets. Its solutions include business intelligence and analytics, cloud and managed services, datacenter infrastructure, networking and security, and software licensing. The company is listed on the London Stock Exchange and currently has a market capitalisation of £2.4 billion.

Softcat shares have had a great run over the last year, rising from around 680p to 1,230p. The stock has been boosted by the group’s strong financial performance – full-year results, issued in late October, showed revenue growth of 24.4% as well as diluted earnings per share growth of 24.6%.

two2                    Source: 2iQ Research

While Softcat clearly has momentum at present, we think it’s slightly concerning that a number of top directors have sold stock recently. Earlier this week, we observed a £1.5 million sale from Managing Director Colin Brown, while last week, we observed a £140,000 sale from CFO Graham Charlton. Chairman Martin Hellawell also sold over £12 million worth of stock in November. This selling activity suggests that insiders see the stock as fully valued after its recent run. With that in mind, we think caution is warranted towards Softcat shares right now.

Lamda Development SA (LAMDA: GA)

12-month performance: +57%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, Finance Director, and CIO
Recent news: Solid Q3 results

Lamda Development is a Greek real estate company. The group owns a broad range of property assets in Athens, and recently signed a contract with the Greek state to regenerate all the land area of the old Athens airport and the coast front, which will be the largest urban regeneration investment ever in Greece. The company is listed on the Athens Exchange and currently has a market capitalisation of €1.5 billion.

Lamda Development issued a solid set of third-quarter results last week. For the nine-month period ending 30 September, retail EBITDA increased 7.9%, while consolidated net profit increased 13.5%. The group also advised that it is close to commencing the Hellinikon project – the largest investment project in modern Greece.

three3                     Source: 2iQ Research

Looking at insider transaction activity here, directors appear to be overwhelmingly bullish. Since mid-December, we have observed ten large purchases from CEO Odysseas Athanasiou, as well as four purchases from Finance Director Vasilios Baloumis, and two each from CIO Theodoros Gavriilidis and Group Director Zisimos Danilatos. Clearly, insiders are confident in relation to the company’s future prospects. With that in mind, we think the outlook for the stock is favourable.

Recent Articles