One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders at the same organization have purchased company stock within a short period of time.
Here, we are going to highlight a cluster buying pattern at CLS Holdings PLC (CLI:LN). CLS Holdings is a UK-based commercial property company that is focused on office space and has assets in the UK, France, and Germany. It’s listed on the London Stock Exchange and currently has a market capitalization of £587 million.
Insider buying at CLS Holdings
Our insider transaction data shows that between October 3 and October 11, five insiders at CLS Holdings bought stock. Those who bought shares were:
- Founder/Director Bengt Mortstedt (200,000 shares @ £1.48 per share)
- CEO Fredrik Widlund (43,969 shares @ £1.47 per share)
- CFO Andrew Kirkman (110,175 shares @ £1.40 per share)
- Chairman Lennart Sten (28,000 shares @ £1.38 per share)
- Vice Chairman Anna Seeley (34,000 shares @ £1.45 per share)
In total, the five insiders spent around £600,000 on CLS Holdings stock.
This insider buying is interesting for two reasons.
Firstly, a number of top-level insiders have purchased stock here. High-ranking insiders such as CEOs and CFOs have access to real-time data, and this allows them to spot trends faster than outsiders. So, their trading activity shouldn’t be ignored.
Secondly, Mr. Mortstedt helped found the company, so he is likely to know the business very well. It is therefore noteworthy that he has added to his holding.
CLS Holdings’ half-year results were solid.
Net rental income of £52.8 million was up 0.9% versus the year prior. Meanwhile, rent collection levels remained high with 99% of rent collected for the first half of the year. EPRA earnings per share were 5.8 pence, 7.4% higher than the 5.4 pence achieved a year earlier.
At the end of H1, the company had £110.5 million of cash and £50 million of undrawn facilities available. The loan-to-value of 38.9% remained at comfortable levels.
As for the statutory NAV per share valuation, this was 329.2 pence at the end of H1, up 0.8% year on year. This is significantly higher than the current share price.
As a result of this solid performance, CLS lifted its interim dividend by 10.6% and announced a share buyback.
"We are well placed to navigate the challenging economic and trading conditions with our high-quality portfolio, a significant portion of index-linked leases and strong balance sheet. We continue to believe the share price discount is unjustified and today are announcing an initial £25.5 million tender offer share buyback to address the issue. If the share price discount persists, we will consider further buybacks in tandem with disposals demonstrating the Board's commitment to delivering shareholder value whilst maintaining the Group's gearing at appropriate levels," said CEO Fredrik Widlund.
In light of these results, we see the insider buying here as a bullish indicator.