If a CEO is buying company stock, it’s often worth taking a closer look. CEOs tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at Keystone Law Group (KEYS:US). Keystone Law is a UK-based legal firm that operates a scalable, platform-based model. A full-service law firm with over 400 lawyers on its platform, it operates across more than 50 industry sectors. The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market cap of £141 million.
Insider buying at Keystone Law
Our data shows that on September 27, Keystone’s CEO James Knight bought 111,110 KEYS shares at a price of 450p per share. This trade cost the insider approximately £500,000 and increased his holding to 8,965,512 shares.
There are unlikely to be many people who have a better understanding of Keystone's prospects than Mr. Knight. He founded the company back in 2002, and since then, he has overseen its exponential growth and its progress as a listed company. Before founding Keystone, Mr. Knight had a 10-year career as a commercial solicitor in London, Hong Kong, and Dubai. Given his background, his large stock purchase is notable.
It’s worth pointing out that Mr. Knight isn’t the only insider to buy stock here recently. Our records show that on September 27, Non-Executive Director Simon Philips also bought shares (20,000 shares @ 457p per share). This trade is notable as well, as Mr. Philips is the CEO of private equity firm ScaleUp Capital.
16% dividend increase
Keystone Law’s share price has fallen this year on the back of recession fears. Since January, it has been cut in half.
Yet recent results show that the company is holding up well in the current economic environment.
For the six months ended July 31, 2022, revenue was up 9.3% year on year to £36.8 million. Meanwhile, pre-tax profit was only 2.5% below that posted a year earlier, at £4.1 million.
It’s worth noting that Keystone increased its interim dividend by 16% to 5.2p. Meanwhile, the company said the client demand has remained strong and that it expects full-year results to be comfortably in line with market expectations.
In light of these results, and the substantial dividend increase, we see the insider buying here as a bullish indicator.