Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.
In this report, we are going to highlight insider buying at Affiliated Managers Group Inc (AMG:US). Affiliated Managers Group is an investment management company that owns stakes in a range of boutique asset managers, hedge funds, and specialized private equity firms. In total, it has assets under management of around $750 billion. It’s listed on the New York Stock Exchange and currently has a market capitalization of $7.8 billion.
Affiliated Managers Group Inc: Insider Buying
Our data shows that on November 2, board member Reuben Jeffery III bought 2,700 AMG shares at a price of $188.39 per share. This trade cost the insider around $509,000 and increased his holding to 23,197 shares.
Mr. Jeffery has extensive experience in the financial industry. Previously, he served as President and CEO of Rockefeller & Co. and Rockefeller Financial Services, Inc. from 2010 to 2018. Before this, he spent seven years working for the US government in a range of positions including Chairman of the US Commodity Futures Trading Commission. Earlier in his career, he was a Managing Partner at Goldman Sachs. Given his background, he is likely to have a good understanding of AMG’s prospects.
What stands out about this purchase is the size of the trade. The fact that Mr. Jeffery has spent over half a million on stock suggests that he is very confident the stock is set to move higher.
It’s worth noting that Mr. Jeffery has made several well-timed trades here in the recent past. Back in February, we highlighted the fact that the insider had picked up 2,500 shares when the stock was trading near $145. Since then, it has risen to around $190.
Q3 Earnings Beat
Affiliated Managers Group recently posted a strong set of Q3 results that beat expectations.
For the period, adjusted EBITDA came in at $228 million, up 26% year on year, while economic earnings per share (EPS) came in at $4.00 versus $3.27 a year earlier. Wall Street had been expecting EPS of $3.91. The group ended the quarter with assets under management of $748 billion, compared with $654 billion at the end of Q3 2020.
During the quarter, the company repurchased $100 million of common stock, taking its total year-to-date share repurchases to $390 million.
Looking ahead, management was very confident that the company can continue to generate growth. “With our strong financial profile and free cash flow generation, and unique competitive advantages developed over our three-decade track record as a partner to independent firms, we are confident in our ability to continue to compound our earnings growth and create meaningful shareholder value through the consistent execution of our strategy over time,” said CEO Jay Horgen.
In light of these strong results, and the confident tone from the CEO, we see the insider buying here as a bullish indicator.