Top-level insiders such as CEOs and Chairmen tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the business, and the share price, is attractive.
In this report, we are going to highlight a large trade from a top-level insider at Segro PLC (SGRO). Segro is a UK-listed real estate investment trust (REIT). Operating in the UK and Europe, it is focused on warehousing and industrial property. It’s listed on the London Stock Exchange and currently has a market cap of £11.8 billion.
Director dealing at Segro
Our insider transaction data shows that on August 15, Segro’s Chairman Andy Harrison picked up 23,036 SGRO shares at a price of £10.77 per share. This trade cost the insider just under £250,000 and increased his holding to 94,044 shares.
This trading activity is worth highlighting for a couple of reasons.
Firstly, Mr. Harrison has made well-timed purchases in the recent past. In June, the insider picked up 40,199 Segro shares at a price of £9.88 per share. Over the next few weeks, the stock climbed up to near £11.
Secondly, this purchase has increased Mr. Harrison’s holding by 32%. The fact that the insider has upped the size of his position by such a large percentage indicates that he is confident the stock is set to move higher.
Strong H1 results
Segro recently posted a strong set of H1 results on the back of high demand for its warehouses.
For the period, adjusted pre-tax profit amounted to £216 million, up 29% year on year. Meanwhile, adjusted earnings per share came in at 16.9 pence, up 22% year on year. At the end of the period, the company’s adjusted NAV per share was £12.49, up 10% year on year, driven by a 7.2% increase in the valuation of the portfolio.
On the back of these results, the company increased its interim dividend by 9%.
“Our prime portfolio of modern, sustainable warehouses focused on key urban markets and logistics corridors across the UK and Europe is in high demand from a diverse range of customers. This strong demand combined with low levels of supply in our key markets, particularly in the urban locations where two-thirds of our assets are located, has helped us to increase rents, capture reversion and indexation, and expand our development program – resulting in inflation-beating earnings growth,” commented CEO David Sleath.
Looking ahead, the company said that it was confident that it has the ability to navigate the more challenging current macroeconomic environment and drive further sustainable compound growth in rental income, earnings, and dividends over the coming years.
In light of these results, we see the insider buying here as a bullish indicator.