If a CEO is buying company stock, investors should take note. 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.
Here, we are going to highlight a large CEO purchase at Bayer AG (BAYN:GR). Bayer is a German multinational life sciences company that focuses on health care and agriculture. It’s traded on the Frankfurt Stock Exchange and currently has a market capitalization of €51.35 billion.
Insider buying at Bayer AG
Our insider transaction data shows that on August 5, Bayer’s CEO and Chairman Werner Baumann picked up 30,000 shares at a price of €54.45 per share. This trade cost the insider approximately €1.6 million.
Large insider purchase
This trading activity is significant for several reasons.
Firstly, the CEO is likely to know the business very well. He has been employed by Bayer for close to 35 years and has held other senior roles since joining the company including CFO and Chief Strategy and Portfolio Officer.
Secondly, Mr. Baumann has spent a significant amount of money on Bayer stock. This is the largest insider purchase here for several years, which suggests to Mr. Baumann is confident that the share price will move higher in the future.
Additionally, Mr. Baumann is not the only insider to buy stock recently. On the same day he bought stock, Executive Board member Stefan Oelrich also bought 3,000 shares at a price of €54.43 per share. Following that, on August 24, another Executive Board Member Sarena Lin bought 8,000 ADR shares at a price of €13.22 per share
Bayer had an excellent Q2 driven by sales in Crop Science, which grew significantly as the market environment improved.
Total sales of €12.82 billion for the group in Q2 were 9.6% higher than the previous quarter and 18.1% higher than the €10.85 billion figure achieved a year prior. Meanwhile, group EBITDA before special items was 30% higher than a year before at €3.35 billion. Core earnings per share of €1.93 were up around 20% versus a year ago.
On the back of this strong performance, Bayer raised its guidance for the Crop Science and Consumer Health divisions, and also for the group as a whole. For fiscal 2022, it now expects to generate currency-adjusted sales of €47 billion to €48 billion (previous guidance: approx. €46 billion). It is now also targeting an EBITDA margin before special items of around 26% to 27% (previous target: around 26%) on a currency-adjusted basis.
“In view of our good business performance and higher growth expectations, we have raised our full-year guidance,” commented Mr. Baumann.
Given these solid Q2 results, we see the recent insider buying at the company as bullish.