Insider buying can offer clues in relation to a stock’s future direction. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some interesting insider buying at Affiliated Managers Group Inc (AMG:US). Affiliated Managers Group is an American investment management company that owns stakes in a number of boutique asset managers, hedge funds, and specialized private equity firms. It is listed on the New York Stock Exchange and currently has a market capitalization of $6.6 billion.
Affiliated Managers Group Inc: Insider Buying
Our records show that this month, two insiders at Affiliated Managers Group have made large purchases. On 9 February, President and CEO Jay Horgen purchased 4,000 shares, spending $544,920 on stock. Then, on 10 February, Reuben Jeffery III purchased 2,500 shares, spending $363,825 on stock. Combined, these insiders spent around $910,000 on AMG stock.
This insider activity is worth highlighting for two reasons. Firstly, our data shows that both of these insiders made a number of well-timed transactions last year. In May, for example, they both purchased stock around the $60-$65 mark. Then in September, they both purchased stock around the $70 mark. Since then, the stock has risen to around $145.
Secondly, both insiders have significant industry experience. Mr Horgen joined AMG in 2007 and became Chief Financial Officer in 2011. He was appointed CEO in 2019. Meanwhile, Mr. Jeffery served as President and CEO of Rockefeller & Co. and Rockefeller Financial Services, Inc. from 2010 to 2018. Given their industry experience, these insiders are likely to have a good read on their company’s growth prospects.
Q4 Earnings Beat
Affiliated Managers Group recently posted fourth-quarter earnings that were significantly better than investors had expected. For the quarter, revenue came in at $554.4 million – more than $40 million higher than estimates – while earnings were $4.22 per share – about 14% higher than analysts’ forecasts. Adjusted EBITDA increased 27% year-over-year, driven by growth in both management and performance fee EBITDA contribution. The company said that it repurchased 10% of shares outstanding across the full year 2020, including $226 million in shares during Q4.
Looking ahead, the company appears to be well positioned for growth. “AMG enters 2021 with significant momentum across our business, including strong investment performance in secular growth areas, increasing opportunities to invest in excellent partner-owned firms, and a highly liquid and flexible capital position. With these competitive advantages, along with the enhanced earnings power of our business, we have an outstanding opportunity to create long-term value, through both accretive growth investments, and returning significant capital to shareholders over time,” said Mr Horgen.
In light of these results, and the confident tone from management, we see the insider buying here as bullish.