Insider Buying

CME Group insider buys $8.3 million worth of stock

CME Group Inc
(CME:US)
12 months:
-22.76%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Q3 results
CME Group Inc
(CME:US)
12 months:
-22.76%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Q3 results
The image's background depicts a person holding a document, with the blog introduction mentioning the insider's purchase of 48,645 shares on top.

Corporate executives and directors tend to have superior information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.

In this report, we are going to highlight some interesting insider buying at CME Group Inc (CME:US). CME Group operates the world’s largest financial derivatives marketplace. Through its exchanges, it provides derivative products across a range of asset classes including equities, FX, metals, agriculture, energy, and crypto-assets. The company is listed on the Nasdaq and currently has a market capitalization of $62.9 billion.

Insider buying at CME Group

Our data shows that on November 4, board member William Shepard purchased 48,645 CME shares at a price of $170.00 per share. This trade cost the insider approximately $8.3 million and increased his holding to 247,843 shares.

Decades of experience

Mr. Shepard has been a member of CME for more than 45 years. Previously, he served as the company’s Second Vice Chairman from 2002 to 2007. Currently, he chairs the group’s clearing house oversight committee. Given his background, he is likely to have an excellent understanding of the company’s operations.

What stands out here is that Mr. Shepard has made a very large stock purchase. Not only is it large in nominal terms but it is also large in relative terms. Our records show that it represents the largest insider purchase at CME for over a decade. The size of the trade suggests that Mr. Shepard is very confident the stock – which is down more than 20% this year – is set to move higher.

Benefiting from volatility

CME Group recently posted a strong set of Q3 results on the back of volatility in the global markets and demand for portfolio hedging tools.

For the period, the company reported total revenues of $1.23 billion, up from $1.11 billion a year earlier. Adjusted net income came in at $719 million, or $1.98 per share, compared to $574 million, or $1.60 per share, a year earlier.

The company noted that during the quarter, year-over-year volume rose in five of its six asset classes, led by interest rates, equity indexes, and a near-record quarter for foreign exchange.

"Our strong Q3 financial performance was driven by a 26% increase in trading volume, generating double-digit growth in total revenue," said CME Group Chairman and Chief Executive Officer Terry Duffy. “The demand for our products remains strong, with year-to-date volumes up 22%, as clients continue to manage risk amid global economic and geopolitical uncertainty," he added.

In light of these strong results, we see insider buying here as a bullish indicator.

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