There are two main reasons insiders invest in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the company expect the company’s share price to rise.
In this report, we are going to highlight insider buying at RS Group PLC (RS1:LN). RS Group is a UK-based distributor of industrial and electronic products and services. Operating in 31 countries worldwide, it has over one million customers. It’s listed on the London Stock Exchange and currently has a market cap of around £3.5 billion.
Our data shows that in recent months, RS Group’s CEO Simon Pryce has made several large stock purchases. On May 23, he picked up 31,000 shares at a price of £8.03 per share. On May 26th, Archie Pryce and Harry Pryce, closely associated with Simon Pryce, also made purchases of 677 shares at an average price of £7.99 per share. More recently, on July 27, he purchased another 16,400 shares at a price of £7.60 per share.
While Mr. Pryce has only served as CEO since March of this year, he is likely to know the company well as he served on the board between 2016 and early 2023 and was highly engaged in the development of the group’s strategy over this period.
He is also likely to have a good read on the industry as he has considerable industry experience. Previously, he was CEO of Ultra Electronics Holdings before it was acquired in 2022. Before this, he was Group CEO of BBA Aviation for 10 years.
Positioned Well for the Long Term
A recent trading update from RS Group revealed that the company is facing a few challenges right now.
For the quarter ended June 30, like-for-like group revenue declined 7%, reflecting a difficult macro backdrop as indicated by deteriorating PMI data, a tough electronics market, and the weakening industrial market.
However, management was confident that it can continue to create value for stakeholders in the long term.
“We are reacting well in this more challenging trading environment with greater focus and by managing our cost base effectively whilst continuing to make strategic investments for the future. I am confident in the RS strategy and scale of opportunity as we continue to position the Group to deliver long-term and through-cycle value creation for our stakeholders," said Mr. Pryce.
In light of this confidence from management, and the fact that the stock has already taken a big hit over the last year, we see the insider buying here as a bullish development.
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