Insider Buying

Insider Buying: A Look at 2iQ’s Top Trading Signals in 2021

Collage of Logos of the companies in grey shade: Avis Budget Group, Bewi, Wiit, The Watches of Switzerland Group, B.Riely, Pam and  Note

Following insider buying can be a good way to capture alpha when investing in stocks and this was demonstrated on many occasions in 2021. During the year, purchases from insiders flagged up some very lucrative investment opportunities.

Here, we are going to highlight some of our best insider buying signals in 2021. These signals show just how powerful insider transaction data can be as part of an investor’s research process.

Avis Budget Group Inc

Let’s start with Avis Budget Group (CAR:US), which is the parent company of Avis Car Rental, Budget Car Rental, and Zipcar. Here, we noticed some large buys from CFO Brian Choi – who was previously a partner at SRS Investment Management – in February. In total, the insider picked up 33,735 shares at an average price of around $49 per share, spending around $1.66 million on stock. This trading activity turned out to be very profitable as Avis Budget Group’s share price ended the year at $207 on the back of better-than-expected results and interest from retail investors. This means Choi generated a gain of around 320% from his buys.

Avis Budget Group Inc - Insider Buying and Selling Chart

Bewi ASA

Next up, Bewi ASA (BEWI:NO), a Norwegian company that provides packaging, components and insulation solutions. Here, COO Jonas Siljeskaer bought 24,424 shares at a price of NOK 30.80 per share in mid-August, spending NOK 752,000 (approx. USD $85,000) on stock. This trade turned out to be very lucrative for the insider as Bewi’s share price ended the year at NOK 75.0 (gain: 144%) on the back of strong Q3 results. This goes to show that even small insider purchases can turn out to be very profitable trading signals.

Bewi ASA -  Insider Buying and Selling Chart

Alerion Clean Power SpA

Another European stock that posted strong gains after insider buying was Alerion Clean Power SpA (ARN:IM). Here, we noticed that in March, CEO Josef Gostner purchased stock three times near the €13 level, picking up a total of 26,950 shares. This trading activity caught our eye due to the fact that Mr. Gostner had a very high long-term Trading IQ of 142 at the time of his purchase. Alerion’s share price surged in the second half of 2021 after the company issued a green bond and raised its 2021 guidance, ending the year at €29.55. This means the CEO generated a gain of around 130% from his trades.

Alerion Clean Power SpA -  Insider Buying and Selling Chart

P.A.M. Transportation Services Inc

In August, we flagged some interesting insider buying at P.A.M. Transportation Services Inc (PTSI:US), which provides truckload transportation logistics across the US, Canada, and Mexico. Here, Director W Scott Davis bought 2,000 PTSI shares at a price of $62.93 per share on August 5, spending $126,000 on stock. We highlighted this trading activity due to the fact that Mr. Davis is an experienced investor that has worked in private equity and investment banking in the past. Mr Davis’ trade was timed very well in hindsight as the stock ended the year at $71 which means that, after accounting for the two-for-one stock split in August, the insider generated a gain of about 125%.

P.A.M. Transportation Services Inc -  Insider Buying and Selling Chart

WiiT SpA

Early in the year, we highlighted some bullish insider activity at Wiit SpA (WIIT:IM), an Italian provider of IT services that helps medium-sized and large-scale businesses with cloud, cybersecurity, and business continuity solutions. Here, we noticed that CEO Alessandro Cozzi has purchased stock three times near the €165 level. Wiit’s share price ended the year at €35.84 on the back of a number of strong trading updates, which means that, when we factor in the 10-for-one stock split during the year, the insider generated a gain of around 117% from his buys.

WiiT SpA - Insider Buying and Selling Chart

Watches of Switzerland Group PLC

Turning to the UK, we had a very profitable signal from luxury retailer Watches of Switzerland Group (WOSG:LN) during 2021. Here, we spotted some cluster buying in April with four board members, including Chairman Ian Carter, buying stock just below the £7 mark. Watches of Switzerland ended up having a very strong year on the back of strength in the luxury watch market, and its share price ended the year at £14.20. This means the insiders who bought stock in April more than doubled their money in the space of less than nine months.

Watches of Switzerland Group PLC - Insider Buying and Selling Chart

B. Riley Financial Inc

Another profitable cluster buying signal came from B.Riley Financial Inc (RILY:US). Here, we highlighted the fact that four insiders, including Founder, Chairman and Co-CEO Bryant Riley, bought stock in January at a price of $46 per share. Combined, these insiders spent around $5.6 million on RILY stock. These purchases were part of a 1.23 million common stock offering. The insiders here did very well for themselves, as B. Riley Financial had a blowout year and its share price ended 2021 at $88.86 (gain: 93%).

B. Riley Financial Inc - Insider Buying and Selling Chart

NOTE AB

Finally, we also had a very profitable trading signal from Swedish firm NOTE AB (NOTE:SS), which offers a platform for the manufacturing of electronics-based products that require a high level of technological competence. Here, board member Johan Hagberg purchased stock on four occasions in June, spending a total of around SEK 1.9 million (approx. USD $225,000) on stock near the SEK 102 level. This caught our eye due to the fact that Mr. Hagberg is a professional investor by occupation. This trading activity from the insider was timed very well as NOTE’s share price ended the year at SEK 231 (gain: 126%) on the back of strong results.

NOTE AB - Insider Buying and Selling Chart

Profiting from Insider Buying Data

In terms of the takeaways from these insider buying signals, there are a few that come to mind.

One is that, when tracking insider transactions, it pays to take a global view. Quite often, investors only follow insider trades from the US. This can limit opportunities. Last year, we had a number of very profitable signals out of Europe and the UK. This is where 2iQ’s global database can add value. 2iQ’s data currently covers stocks in more than 50 countries.

Another is that insider buying at smaller companies is often worth a closer look. A number of the stocks covered in this article had market capitalizations of less than $2 billion when we highlighted the insider activity.

A third takeaway is that smaller trades can generate profitable signals. Often, investors tend to focus on insider trades worth over $1 million. However, many of the insider trades in this report were significantly smaller than this.

Finally, it’s worth noting that all of these companies had momentum when the insiders bought stock. Nearly all had recently posted strong results. So, insiders were simply capitalizing on the business momentum.

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