One of the most powerful signals in insider transaction analysis is cluster buying. This is where three or more insiders have bought stock within a short period of time. Research shows that cluster buying is more informative than non-cluster buying and tends to take place during periods of high information asymmetry.
In this report, we look at four stocks that saw cluster buying in February. All of these stocks had purchases from at least three insiders within a short space of time during the month.
Adtalem Global Education Inc
First up, we have Adtalem Global Education Inc (ATGE:US), which operates several universities in the medical and healthcare space, as well as numerous e-training and professional development companies in the financial services area.
Our data shows that between 4 February and 16 February, seven insiders at Adtalem purchased company stock. Combined, these insiders spent around $450,000 on ATGE shares. The largest purchase was from board member Michael Malafronte, who spent $235,000 to acquire 6,000 shares.
Management at Adtalem appears to be quite confident in relation to the outlook for the company. “Through strategic investments such as our pending acquisition of Walden University, we have positioned Adtalem to meet the needs of an evolving market and capitalize on long-term growth trends,” said Chairman and CEO Lisa Wardell recently.
Given that online education is booming right now, we see this cluster buy as a bullish development.
Next, we have Coty Inc (COTY:US). Coty is an American beauty company that specializes in cosmetics, skin care, fragrance, and hair care. The company is the global leader in fragrance, the second largest company for hair color and styling products, and the third largest company for color cosmetics.
Our records show that on 11 February, three insiders at Coty bought stock in a cluster buying pattern. Those who bought shares included:
- Robert Singer – who joined the board in 2010 and was previously CFO of Gucci Group
- Olivier Goudet – who is currently managing partner of JAB, a privately-held investment company
- Isabell Parize – who was previously CEO of Douglas Holding SA, a German fragrance and cosmetics company, and CEO of Nocibe, a French fragrance and cosmetics retail company
Combined, these insiders spent around $940,000 on COTY stock.
Coty has been impacted by Covid-19 lockdowns. However, the company recently advised that it continues to make progress on its strategic priorities, which include digital and e-commerce acceleration (e-commerce saw 40% growth in Q2), expansion into white space opportunities such as prestige cosmetics and skincare, and building out its presence in China.
Given that Coty looks well placed to benefit from the reopening of the global economy, we see the cluster buying pattern here as bullish.
Akzo Nobel NV
Another stock that saw cluster buying in February was Akzo Nobel (AKZA:NA). Akzo Nobel is a paints and coatings company based in the Netherlands. Its brands include Dulux, Coral, Flexa, and Hammerite.
Our records show that between 17 February and 18 February, three insiders, including CEO Thierry Vanlacker, purchased stock. Combined, these insiders spent just under €500,000 on AKZA shares. The largest purchase was from Vanlacker, who spent €294,000 on shares.
Akzo Nobel posted a 32% increase in fourth-quarter core earnings in February, beating analysts' expectations, and said that it would buy back €1 billion worth of its shares in the coming year.
“What’s really exciting is that we’re literally only half-way through our transformation to reclaim our position as the reference in the industry. Our new Grow & Deliver strategy represents the second stage of our journey – which began in 2017 – to double the profit of AkzoNobel,” commented Vanlacker.
Clearly, insiders expect the stock to go higher.
Finally, we have Tele2 AB (TELE2B:SS). Tele2 is a European telecommunications operator headquartered in Stockholm, Sweden. It is a major telephone operator in the Nordic and Baltic countries and an alternative provider in many others.
Our records show that between 22 February and 23 February, three insiders (the CEO, the CFO, and the COO) purchased stock in a cluster buying pattern. Combined, these insiders bought 37,000 shares, spending about SEK 3.9 billion (approx $475,000) on stock.
Tele2 recently posted a solid set of full-year results. While revenue for the year was down 3%, Underlying EBITDA increased by 3% organically compared to Q4 2019 helped by strong performance in the Baltics and cost savings. Encouragingly, the company increased its dividend by 9%, which indicates that management is confident about the future.
In light of this large dividend increase, we see the cluster buying pattern here as bullish.