Alliance Data Systems Corp (ADS: US)
12-month performance: -65%
Insider activity: Bullish
Buying pattern: Purchases from multiple insiders
Recent news: Mixed Q1 update
Alliance Data Systems is a provider of data-driven loyalty and marketing services to consumer-facing companies. The company operates through two segments: Alliance Data Card Services, which manages more than 145 branded credit programmes, and LoyaltyOne, which provides coalition and short-term loyalty programmes. It is listed on the New York Stock Exchange and currently has a market capitalisation of $2.3 billion.
Alliance Data Systems shares have underperformed in 2020 as a result of the economic uncertainty associated with Covid-19. Starting the year near the $110 mark, the stock fell as low as $20 in March, although it has since recovered to around $47. The outlook for Alliance Data Systems may not be as bad as some investors fear, however. Recently, the company advised that at the end of the first quarter, it had over $1 billion of immediate liquidity, and also said that it expects to remain EBT and cash flow positive with sufficient liquidity through the near-term stress.
Looking at insider transaction activity here, it’s interesting to see that there have been multiple insider purchases since mid-March. In March, seven insiders, including Robert Minicucci, who was Chairman until recently, and Roger Ballou, who is now Chairman, purchased shares, spending more than $1 million on stock combined. More recently, new board member John Gerspach, who was previously CFO at Citigroup, spent $257,550 on stock on 12 June. Overall, we see this pattern of insider buying as a bullish signal. Insider sentiment appears to be very positive.