If multiple insiders have bought company stock within a short period of time, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight an interesting cluster buying pattern at Adtalem Global Education Inc (ATGE:US). Adtalem is an American company that operates several universities in the medical and healthcare space. A leading workforce solutions provider, it partners with organizations to proactively address future workforce needs. The company is listed on the New York Stock Exchange and currently has a market capitalization of $1.05 billion.
Adtalem Global Education Inc: Insider Buying
Our data shows that between February 10 and February 17, six insiders at Adtalem bought stock. The largest trades were from:
- Chair Lisa Wardell (4,020 shares @ $24.48 per share)
- Board member Michael Malafronte (52,600 @ 23.75 per share)
- Board member Ken Phelan (4,086 shares @ $24.47 per share)
Combined, these three insiders spent around $1.45 million on ATGE stock.
There are a couple of things that stand out about this cluster buying pattern.
One is that there is a large purchase from Chair Lisa Wardell. Wardell is a top-level insider here as she previously served as CEO and President of the company between 2016 and 2019. This means she is likely to know the company very well.
Another is that Board member Michael Malafronte has spent over $1 million on stock. Mr. Malafronte is an expert investor who previously worked as a Portfolio Manager at Oppenheimer & Close. He is a Founding Partner of International Value Advisers, LLC and served as Managing Partner for 13 years until December 2020. He also served as a senior analyst at First Eagle Funds. This experience means he is likely to have an excellent understanding of the intrinsic value here.
Adtalem’s recent fiscal Q2 results showed that the company continues to grow at a rapid rate.
For the three months ended December 31, 2021, revenue amounted to $371.2 million, an increase of 58.4% compared with the prior year, boosted by the acquisition of Walden. Meanwhile, operating income excluding special items was $70.2 million, a 70.0% increase compared with the prior year.
It’s worth noting that in January, the group agreed to sell its financial services arm for $1 billion. This deal is expected to close in the third quarter of FY2022.
“I’m encouraged by the tremendous progress we’ve made to reposition Adtalem as the leading provider of healthcare education. The recent announcement of the pending sale of our Financial Services segment is the culmination of a long-term strategy to sharpen the focus of our portfolio and greatly enhance our ability to address – at scale – the rapidly growing and unmet demand for healthcare professionals in the US,” said CEO and President Steve Beard, in relation to the deal. “We are more excited than ever about the opportunities ahead,” he added.
In light of these developments, and the confidence from the CEO, we see the insider buying here as a bullish indicator. It indicates that insiders agree that the stock is set to move higher.