When a top-level insider makes a large purchase in their own company, investors should take note. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
Here, we are going to look at a recent large insider purchase at On the Beach Group PLC (OTB:LN). On the Beach is an online retailer of beach holidays. Based in the UK, it has been trading since 2004, and went public in 2015. It’s listed on the London Stock Exchange and currently has a market capitalization of £212 million.
Insider buying at On the Beach PLC
Our insider transaction data shows that on August 19, the Founder/CEO of On the Beach, Simon Cooper, purchased 1.53 million shares at a price of £1.30 per share. This transaction cost the insider around £2 million (approx. $2.3 million) and increased his holding in the company by close to 20%.
We see this insider trading activity as interesting for two main reasons. Firstly, Mr. Cooper founded the business so almost certainly knows the company better than anyone else. He also founded On the Piste Travel, which was purchased by TUI in 2008.
Secondly, the fact that the insider has spent £2 million on stock and increased his holding by a large percentage suggests that he is very confident that the shares will move upwards in the future. It’s worth noting here that the shares have experienced significant weakness over the last year – clearly Mr. Cooper sees a buying opportunity.
Well positioned as the market recovers
On the Beach saw an improvement in business during H1 2022 with sales improving markedly on H1 2021 when Covid-19 impacted the business severely.
For the period, group revenue came in at £52.9 million, up from £12.0 million a year earlier. Meanwhile, earnings per share for the half were positive at 0.1p, compared to -5.0p in the first half of 2021.
Encouragingly, the group said that sales have remained resilient into H2 and were 33% ahead of FY2019 in the eight weeks to 22 May 2022. It noted that it is confident that the upfront investment into the brand and proposition will ensure the group trades profitably in the second half and will exit the year in the best possible position to grow market share.
“Whilst we have entered the second half with resilient sales, visibility of the near-term outlook for the UK outbound travel industry remains limited. Despite this, we remain confident that we have taken the right actions throughout the pandemic and we will continue to support our customers and staff as a priority. Our investments in brand and proposition will ensure profitable trading into the second half and has left us in a strong position to continue growing market share,” said Mr. Cooper.
Given these solid results, we see the insider buying here as a bullish indicator.