Insider Buying

2iQ Insider Brief : Viscofan SA(VIS SM) Supreme Cannabis Co Inc (FIRE CN) Metrovacesa SA(MVC SM)

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Viscofan SA (VIS: SM)

 12-month performance: -14%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO 
Recent news: Announced a profit warning

 Viscofan is a Spanish manufacturer of casings for meat products. Founded in 1975, its product range includes cellulose, collagen, fibrous and plastic casings, and the group has presence in over 100 countries across the world. The stock is listed on the Madrid Stock Exchange and currently has a market capitalisation of €2.3 billion.


Viscofan shares fell from €62 to €50 in late October, wiping out 11 months of gains, after the group announced that it will not achieve its full-year results guidance due to a slowdown across Asian markets. The company said that the market strength observed in the first half of the year had slowed in the third quarter due to the decline in emerging markets – especially China and Southeast Asia – and that despite price increases and continued growth in market share, the result for the year would be below initial expectations. The shares have continued to drift lower since the profit warning and currently trade below €49.


Source: 2iQ Research

From an insider transaction perspective, we think the stock looks interesting after the recent share price fall. This is due to the fact that since October’s profit warning, a large number of top-tier directors have purchased shares in the company, which suggests these directors are confident the group can rebound. Those buying have included CEO Jose Canales Garcia and COO Andres Diaz Echevarria, and we have also observed a number of large purchases from a 10% holder investment management company, which is another bullish sign. As such, we believe the stock is worth a closer look at current levels, despite the recent profit warning. 


Supreme Cannabis Co Inc (FIRE: CN)

 12-month performance: -35%
Insider activity: Bullish
Buying pattern: Purchases from Founder, CEO and CFO
Recent news: Provided a positive construction update

 Supreme Cannabis Company Inc, formerly known as Supreme Pharmaceuticals Inc, is a Canadian company that is focused on developing businesses in the cannabis market. The group’s 7ACRES venture – which operates a 342,000 square foot greenhouse facility located in Kincardine, Ontario – is the only licensed producer focused on cultivating craft-quality cannabis at commercial scale. The stock is listed on the Toronto Venture Exchange and currently has a market capitalisation of CAD $507 million.


Cannabis stocks experienced a volatile year in 2018, with many stocks within the sector ending the year lower. Supreme Cannabis was no exception – despite a sharp upward spike in its share price in the first week of January 2018 – with the shares declining more than 40% over the course of the year. However, sentiment towards the stock appears to have improved recently after the group provided a construction update for 7ACRES on 2 January, and the shares have rallied by over 30% since the beginning of 2019. Could there be further gains to come?


Source: 2iQ Research

Analysing insider transaction activity at Supreme Cannabis, we think the stock has the potential to keep rising from current levels. This is by virtue of the fact that three top-level directors, including Founder and President John Fowler, CEO Navdeep Dhaliwal, and CFO Dimitre Naoumov have all purchased shares in the company in the last week, which we interpret as a bullish sign as these directors are likely to have strong insight into the group’s future prospects. With the company on track to produce 50,000 kg of cannabis per year by mid-year, and three key insiders acquiring more shares, we think the outlook for the stock is favourable.


Metrovacesa SA (MVC: SM) 

12-month performance: -30%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, CFO and COO
Recent news: Advised that it’s on track to meet or exceed 2018 targets

 Metrovacesa SA is a Spanish real estate developer that specialises in building innovative and sustainable housing and also provides real estate management services. Its asset portfolio includes more than 6 million square meters of building land across Spain, as well as already developed properties in cities such as Barcelona, Madrid, Cordoba and Malaga. The stock is listed on the Madrid Stock Exchange and currently has a market capitalisation of €1.6 billion.


After returning to the Madrid Stock Exchange in February last year (it was delisted in 2013), Metrovacesa shares experienced a challenging second half of the year. In late July, the group reported a first-half net loss of €8.3 million and reduced its target for new homes by 2020 by 25%, and this resulted in a significant three-month share price fall. However, the shares appear to have stabilised recently, and in November, the company advised that it should reach or exceed its 2018 targets and that it plans to increase its residential deliveries by 34% in 2019.


Source: 2iQ Research

Analysing insider transaction activity here, we believe the shares have upside potential from current levels. We say this because we have observed a substantial amount of director buying in January, which we view as a bullish signal. Those buying have included CEO Jorge de Leza Eguiguren, CFO Borja Rendon-Luna, COO Juan Nunez Berruguete and a number of other top-tier directors. In our view, this buying activity indicates that the outlook for Metrovacesa is not as bad as last year’s share price performance suggests it is.

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