Corporate insiders have access to real-time company information and often also have a wealth of experience that can help them evaluate their firms’ prospects. If they are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight a large insider purchase at Constellation Software Inc (CSU:CN). Constellation Software is a software company that serves customers in a range of industries. Its goal is to acquire, manage, and build market-leading software businesses that develop specialized, mission-critical solutions to address the specific needs of particular industries. It’s listed on the Toronto Stock Exchange and currently has a market cap of around CAD $59.1 billion.
Our data shows that on August 22, board member Laurie Schultz purchased 185 shares at a price of CAD $2,684 per share. This trade cost the insider a little under CAD $500,000 and increased her holding to 338 shares.
Ms. Schultz – who has been a member of the board since 2021 – has considerable experience in the tech sector. Previously, she was President and CEO of compliance software firm Galvanize for around 10 years before it was sold to Diligent in 2021. Before this, she held several executive positions at accounting software company Sage. Given her background, she is likely to have a good idea of Constellation Software’s prospects.
What stands out here is that she has made a large purchase that has increased the size of her holding significantly (+120%). This suggests that she is confident the stock is set to move higher.
Solid Q2 Results
Constellation Software recently posted solid results for Q2.
For the quarter, revenue was up 26% (5% organic growth after adjusting for changes in foreign exchange rates) to $2,039 million. Net income declined 18% to $103 million, however, cash flow from operations jumped 58% to $123 million.
On the back of this performance, the company declared a dividend of CAD $1.00.
After the results, analysts at RBC raised their target price from CAD $3,200 to $3,300. This new target is roughly 20% above the current share price.
In light of these solid results, and the new price target from RBC, we see the insider buying here as a bullish development.