One insider transaction pattern we always look out for here at 2iQ Research is ‘cluster buying'. This is where multiple insiders are buying company stock simultaneously. The reason we look for this pattern is that it tends to produce strong trading signals. A 2017 study on insider trading, for example, found that insider purchases that occurred within two days of a peer insider purchase generated abnormal returns of 2.1% over the next month – 0.9% higher than the abnormal returns following solitary insider purchases.
In this report, we are going to highlight four stocks that saw cluster buying in March. All four of these stocks had purchases from at least three insiders within a short period of time during the month.
Tupperware Brands Corporation
The first stock we want to highlight is Tupperware Brands Corporation (TUP:US). It’s a consumer products company that sells design-centric preparation, storage, and serving solutions for the kitchen and home.
Our records show that between 12 March and 15 March, five insiders at Tupperware Brands bought company stock in a cluster buying pattern. Those who purchased shares were:
- CEO Miguel Fernandez (20,000 shares)
- CFO Sandra Harris (2,000 shares)
- Executive Vice Chairman (20,475 shares)
- President, Commercial Patricio Cuesta (3,000 shares)
- Chief Legal Officer & Secretary Karen Sheehan (2,012 shares)
Tupperware Brands recently posted a good set of fourth-quarter results that showed that the company’s turnaround plan is gaining momentum. For the quarter, sales were up 17% year on year to $489.6 million (US sales were up 46%) while adjusted diluted earnings per share came in at $0.14, compared to $(0.63) in the prior year period.
“In 2020 we dramatically right-sized our cost structure, improved our cash flow from operations, and refinanced our debt which has created a stronger foundation to support the growth strategies of our turnaround plan,” commented CFO Sandra Harris.
In light of the progress the company is making turning itself around, we see the cluster buy here as a bullish signal.
London Stock Exchange Group
The next stock to highlight is London Stock Exchange Group (LSE: LSEG). It’s a leading global financial markets infrastructure and data company that provides capital markets, data and analytics, and post trade services. It recently completed the acquisition of financial data powerhouse Refinitiv.
Here, we observed a bullish cluster buy between 8 March and 12 March. Over this period, the following three directors purchased stock:
- Senior Independent Director Stephen O’Connor (1,450 shares)
- Non-Executive Director Cressida Hogg (1,150 shares)
- Non-Executive Director Kathleen DeRose (300 shares)
London Stock Exchange’s share price has taken a hit recently after the group announced that it is facing significant costs this year to integrate Refinitiv. Year to date, the stock is down about 20%.
The cluster buy here suggests that insiders see the share price fall as a buying opportunity. It’s worth noting that the company recently raised its full-year dividend by 7% which indicates that management is confident about the future.
Siemens Healthineers AG
In Europe, we observed a cluster buy at Siemens Healthineers AG (SHL:GR) during the month. It’s a leading healthcare company that develops, manufactures, and distributes imaging, diagnostic, and advanced therapies products and services to healthcare providers worldwide.
Here, we observed four insider purchases between 25 March and 30 March. Those who purchased stock were:
- Chairman Ralf Thomas (20,000 shares)
- Supervisory board member Peer Schatz (12,500 shares)
- Supervisory board member Andreas Hoffmann (900 shares)
- Executive board member Christoph Zindel (2,200 shares)
Combined, these insiders spent around €1,620,000 on stock.
It’s worth noting that CEO Bernhard Montag also spent €232,000 on stock in late February.
Siemens Healthineers produced strong results in Q1 with the core business returning to growth. Revenue grew 13% year on year with diagnostics seeing 23% growth while adjusted basic earnings per share were up 36% to €0.49.
Looking ahead, the company raised its guidance to 8%-12% comparable revenue growth versus previous guidance of growth of 5%-8%.
Given this increase in guidance, we see the cluster buy here as bullish.
LINK Mobility Group Holding ASA
Finally, we also observed a cluster buying pattern at LINK Mobility Group Holding (LINK:NO) late in the month. It’s a Norwegian software company that specializes in messaging and digital services and offers a communication platform as a service (CPaaS).
Our data shows that between 24 March and 31 March, three top-level insiders purchased stock here. Those who bought stock were:
- Chairman Jens Rugseth (500,000 shares)
- CEO Guillaume Van Gaver (25,000 shares)
- EVP M&A and Business Development Soeren Sundahl (150,000 shares)
LINK Mobility shares have underperformed since the company’s Initial Public Offering in October 2020. Since mid-February, the stock has fallen from around NOK 60 to NOK 40.
Fourth-quarter results, however, were quite good. For the quarter, the company generated organic growth of 16%. Meanwhile, looking ahead, the company said that it is on track to achieve enterprise growth of 20% over the mid to long term.
Given this performance in Q4, we see the cluster buy here as a bullish signal.