One of the strongest signals in insider trading analysis is what’s known as ‘cluster buying.’ This is where multiple insiders have purchased stock within a short period of time.
In this report, we are going to highlight a cluster buying pattern at Adtalem Global Education Inc (ATGE:US). Adtalem operates several universities in the medical and healthcare space, as well as numerous e-training and professional development companies in the financial services area. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.0 billion.
Adtalem Global Education Inc: Insider Buying
Our records show that in February, six insiders at Adtalem have purchased company shares. Combined, these insiders have spent around $430,000 on stock. The largest purchase was from board member Michael Malafronte, who spent $235,000 to acquire 6,000 ATGE shares.
Cluster Buying
This insider buying activity is worth highlighting for a number of reasons. Firstly, the fact that six insiders have purchased stock (all around the $40 level) shows that there is a clear consensus of opinion that the stock is undervalued right now.
Secondly, insider purchases are not very common at Adtalem. Our records show that there have only been two other purchases in the last two years.
Third, Mr. Malafronte – who made the largest purchase – has investment management expertise. Currently, he is a managing partner at International Value Advisers. Previously, he was a portfolio manager at Oppenheimer & Close, where he was responsible for idea generation, in-depth research, and stock selection.
Capitalizing On Long-Term Growth Trends
Adtalem posted a solid set of second-quarter results earlier this month.
For the quarter, revenue came in at $283.1 million, up 6.4% on the prior year, while diluted earnings per share came in at $0.44 versus $0.10 in the prior year.
Looking ahead, the company said that it expects revenue growth of 5% to 7% for the full year, and growth for diluted earnings per share from continuing operations, excluding special items, of 28 to 32% – an increase from its previously issued outlook.
“Through strategic investments such as our pending acquisition of Walden University, we have positioned Adtalem to meet the needs of an evolving market and capitalize on long-term growth trends. We are accelerating and prioritizing those elements of our strategy that allow us to capitalize on the robust demand in medical, healthcare, and online education. That demand has continued to increase during the pandemic and provides us greater opportunity to differentiate our online offerings given our decades of experience in quality online education delivery,” commented Lisa Wardell, Chairman and CEO of Adtalem.
In light of the confident tone from management, we see the cluster buying here as a bullish signal.
