Insiders have access to real-time information on their companies 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 some interesting insider buying at Fevertree Drinks PLC (FEVR:LN). Fevertree Drinks is a British beverages company that produces premium drink mixers. Its products are sold in a range of markets including the UK, the US, Europe, and Australia. It is listed on the London Stock Exchange and currently has a market cap of £1.0 billion.
Insider buying at Fevertree Drinks
Our data shows that between September 29 and October 3, two board members at Fevertree Drinks made large stock purchases. Those who bought shares were:
- Jeff Popkin (41,669 shares @ USD $9.20 per share).
- Kevin Havelock (41,000 shares @ £8.36 per share).
Combined, the two insiders invested just over £680,000 in Fevertree stock.
What stands out here is that both insiders have considerable experience in the beverages industry.
Mr. Popkin is a North American beverage industry veteran with almost 30 years of experience. His experience spans the beer, spirits, premium non-alcoholic carbonated soft drink and health & wellness beverage categories for a range of global brands. He is currently North American CEO of Mast-Jägermeister.
Mr. Havelock has more than 25 years' drinks industry experience and is currently Global President, Refreshment at Unilever. Since joining Unilever in 1985, he has held a number of senior leadership positions around the world, including Chairman for Unilever UK, Unilever France, and Unilever Arabia as well as President, Unilever North America.
Given their experience, these insiders are likely to have a good understanding of Fevertree’s prospects and investment potential.
Long-term growth story
In Fevertree’s latest results, for the first half of 2022, the group advised that it had continued to extend its premium market leading position in the UK, US, Europe, and the rest of the world.
For the period, revenue came in at £160.9m, up 14% year on year. Breaking this down, revenue in the US was up 11% year on year while revenue from Europe was up 27% year on year.
Despite raising its prices, margins were hit by industry-wide inflationary logistics and product cost headwinds with gross margin for the period falling to 60.1% versus 62.5% a year earlier. However, the company reiterated its guidance for EBITDA of £37.5 million to £45 million for the full year.
Looking ahead, management was very confident in relation to the long-term growth story.
“The long-term opportunity for the business remains very significant and we continue to focus on investing in our products, marketing activities and our team. As the global leader of the premium mixer category we remain at the center of the well-established trends to premiumization and long-mixed drinks whilst also perfectly positioned to explore these incremental opportunities," said CEO Tim Warrilow.
In light of the confidence in the growth story, we see the insider buying here as a bullish indicator.