Here’s Where Insiders Bought Stocks in Q1 2021

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Aggregate insider transaction data can provide investors with powerful ‘big-picture’ insights. Corporate insiders tend to see industry and business trends way ahead of everyone else and research shows that their trading activity, as a whole, can provide valuable clues about where the market, and specific sectors, are heading next.

In this report, we are going to highlight the sectors that saw the highest number of large insider purchases (€1 mil+) in the first quarter of 2021. Our analysis covers insider buying across North America, Europe, and Asia. We will also highlight some interesting insider transaction activity we observed over the three-month period.

Insider Buying in North America

Across North America, the three sectors that saw the highest number of large insider purchases in Q1 were healthcare, financials, and materials. During the period, we observed 27 large purchases in the healthcare sector, 23 in the financials sector, and 10 in the materials sector.

Insider Buying in North America

What stands out here is the substantial amount of insider buying in the healthcare sector. This is a sector of the US market that has performed very well over the last four years, returning 13.5% in 2020, 20.8% in 2019, 6.5% in 2018, and 22.1% in 2017. Clearly, insiders believe that the sector is set to continue outperforming in the near term.

It’s also interesting to see that insiders in the financials sector continued to buy stock in Q1. This sector saw a substantial amount of insider buying late in 2020. This activity was timed very well – this year financials has been one of the best performing sectors so far. The recent buying suggests that insiders expect the upward trend to continue.

Source: www.spglobal.com

Insider Buying in Europe

In Europe, the buying pattern during Q1 was quite different to the pattern seen in the US. Here, the three sectors that saw the highest number of large insider purchases were industrials, consumer discretionary, and financials – all economically-sensitive sectors. During the quarter, we observed 43 large buys in industrials, 31 in consumer discretionary, and 29 in financials.

Insider Buying in Europe

One thing that stands out here is that industrials saw the highest number of large buys by a wide margin. Clearly, insiders expect industrial activity across Europe to pick up in 2021 after it fell significantly in 2020 due to Covid-19 disruption.

Two stocks that are worth highlighting here for their insider transaction activity are Finnish elevator and escalator specialist Kone Oyj and Swedish engineering company Sandvik AB. Kone saw an enormous amount of buying (€70 million+) from Chairman Antti Herlin during the quarter while Sandvik saw a large purchase (SEK 60 million) from Chairman Johan Molin as well as some big buys from Swedish investment companies L E Lundbergforetagen and Industrivärden.

Insider Buying in Asia

In Asia, the three sectors that saw the highest number of large insider purchases during Q1 were industrials, consumer discretionary, and healthcare. However, there was also a considerable number of large buys in the materials and technology sectors. During the period, we observed 57 large insider purchases in industrials, 46 in consumer discretionary, 27 in healthcare, 26 in technology, and 23 in materials.

Insider Buying in Asia

Again, industrials was the clear winner during the period. However, buying was also elevated in other economically-sensitive sectors such as materials and consumer discretionary.

Two stocks that are worth highlighting here include integrated glass manufacturer Xinyi Glass Holdings and industrial valve specialist Jiangsu Shentong Valve Co. The former saw substantial buys from its CEO and Chairman in March while the latter saw buys worth CNY 112 million (approx $17.2 million) from its Chairman in March.

Insider Buying Across All Regions

Combining the insider buying across the three different geographic regions, industrials was the winner overall in Q1 with the highest level of large insider purchases, followed by consumer discretionary and financials.

Insider Buying Across All Regions

This buying activity suggests that corporate insiders are confident that the global economy will rebound in 2021 after a challenging year in 2020.

Given that insiders generally tend to be good at anticipating future market movements due to their access to the latest information, we think these three sectors have a good chance of outperforming the broader market in 2021.

 

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