A top-level insider has a deeper insight into their own company’s operations than any outside analyst or investor could ever hope to obtain. They represent the smart money. This means that if they’re buying stock, it’s worth taking note.
Here, we are going to highlight insider purchases at AJ Bell PLC (AJB:LN). AJ Bell provides online investment platforms in the UK and offers a broad range of stockbroking services. It also publishes Shares Magazine which offers investment advice. The company has £65.2 billion in assets under administration, held on behalf of 346,700 clients. It’s traded on the London Stock Exchange and currently has a market capitalization of £1.73 billion.
AJ Bell PLC: Insider Buying
Regulatory filings show between 4 June and 7 June, two top-level insiders at AJ Bell purchased stock. Founder and CEO Andrew Bell purchased 369,839 AJB shares at an average price of £4.45 per share. This purchase cost the insider approximately £1.65 million. Meanwhile, Managing Director Fergus Lyons purchased 369,840 AJB shares at an average price of £4.45. This cost Lyons approximately £1.64 million.
Back in January, we highlighted insider selling activity at AJ Bell. We viewed this selling activity as bearish. Insiders sold at the right time – since that report, the company has underperformed the FTSE 100 index by around 9%. These recent purchases – which are significant in monetary terms – suggest that sentiment at the top of the company has improved.
Both of these insiders have over 20 years of experience at AJ Bell. This means that they are likely to know the company incredibly well – especially Andrew Bell, as he co-founded the company in 1995. Lyons spent twenty years in the financial sector before joining the company in 2000. He is responsible for AJ Bell Investments which gives us confidence that he is an accomplished investor.
AJ Bell’s half-year numbers were very strong. Revenue climbed to £73.9 million versus £60.9 million in H1 2020 and profit before tax came in at £31.6 million versus £22.7 million a year before. This performance was driven by strong growth in customer numbers with total customer numbers growing by 51,492 in the half, which was a jump of 17% since the start of the current financial year. Total net inflows were £3.1 billion and the balance sheet strengthened, net assets rose by 8% to £117.9 million. Assets under administration were up 15% and the customer retention rate was high at 94.8%.
“We have delivered a strong financial performance in the first half of the year, driven by record levels of new customers, inflows and dealing activity, with revenue up 21% and profit before tax up 39%. We have a resilient business model, our financial position is strong, we continue to grow market share and the outlook for the business remains positive,” commented CEO Andrew Bell.
On the back of these exceptional results, we see the recent insider trading at the company as bullish. It suggests that two key insiders strongly believe that the company stock is undervalued.