Insider transaction data can help active investors capture alpha and we saw the power of this data on many occasions in 2021. During the year, insider buying flagged up some very profitable investment opportunities.
Here, we are going to highlight five insider buying trading signals from 2021 that generated gains of more than 50% for the year. These signals demonstrate that insider transaction data can add a lot of value for those who are trying to beat the market.
KKR & Co Inc
In February, we highlighted some bullish insider buying at KKR & Co Inc (KKR:US), a global investment firm that specializes in alternative investments. Here, board member Robert Scully had purchased 26,000 KKR shares at a price of $48.13 per share, spending around $1.3 million on stock. We thought this trading activity was interesting as Mr. Scully was previously Co-president, Chairman of Global Capital Markets, and Vice Chairman of Investment Banking at Morgan Stanley. In hindsight, this trade was timed very well as KKR’s share price ended the year at $74.50 on the back of the buoyant private equity market meaning that Mr. Scully generated a gain of about 55% from his purchase.
In March, we flagged up some bullish insider buying at iron ore mining company Cleveland Cliffs Inc (CLF:US). Here, we noted that both Chairman, President and CEO Lourenco Goncalves and CFO Keith Koci had made large stock purchases on March 5 near the $13 level. Combined, the two insiders had spent over $1.5 million on stock. We thought it was interesting that two top-level insiders were buying stock simultaneously. In hindsight, these trades were timed very well as Cleveland Cliffs’ share price ended the year at $21.77 on the back of record Q3 earnings. This means the two insiders generated gains of nearly 70% from their purchases.
In early April, we highlighted some interesting insider buying at luxury goods group Hermès International (RMS:FP). Here, Phillippe Dumas – the grandson of Hermès Founder Emile Dumas – had purchased 5,000 shares at a price of €978 per share on March 18. This trade had cost the insider approximately €4.9 million. Given that Hermès had just posted a very strong set of Q4 results, we saw the purchase as a bullish indicator. In hindsight, the trade was timed very well – Hermès’ share price rose up to around €1,680 in November on the back of strength in the luxury goods sector before ending the year at €1,536.
Hugo Boss AG
Also in April, we highlighted some buying at luxury goods firm Hugo Boss (BOSS:GR). Here, both CFO Yves Mueller and board member Luca Marzotta had made purchases near the €34-€35 level, spending around €300,000 on stock. We noted at the time that both insiders had made well-timed purchases in the recent past. These trades were timed well too. Hugo Boss had a strong year in 2021, exceeding its sales target and posting record Q4 sales, and its share price ended the year at €53.50. This means the insiders generated gains of more than 50%.
Bluegreen Vacation Holding Corp
Finally, in May, we flagged up some bullish insider buying at Bluegreen Vacation Holding Corp (BVH:US), which manages resorts in popular leisure and urban destinations. Here, both CFO Raymond Lopez and Chief Sales Officer Dusty Tonkin had been buying stock near the $19 mark. Our data showed that on May 13, the two insiders had spent around $300,000 on BVH stock. We thought this was worth highlighting due to the fact that both insiders had upped their holdings significantly with their trades. These trades were timed very well in hindsight as the stock ended the year at $35.10 on the back of better-than-expected earnings in Q2 and Q3.
It’s worth pointing out that this is only a small selection of our profitable insider trading signals from 2021. There were many more buying signals that beat the market. Some of the best signals delivered gains of well over 100% for the year. Overall, insider transaction data was a very valuable research tool in 2021