Following insider transactions in smaller companies can be a very profitable strategy. Smaller companies are typically less researched than larger companies, meaning that they offer greater potential for ‘surprises’ that can generate big gains.
In this report, we are going to highlight some insider buying in an Italian small-cap company, Alerion Clean Power Spa (ARN:IM). Alerion Clean Power is an electric industrial group that specializes in electricity production from renewable sources, particularly in the wind power sector. It is listed on the Borsa Italiana and currently has a market capitalization of €697 million.
Alerion Clean Power: Insider Buying
Our records show that in March, Alerion’s CEO Josef Gostner has purchased stock three times. In total, the insider has purchased 26,950 shares this month, spending about €350,000 on stock.
Bullish Trading Pattern
This is not the first time that Gostner has purchased Alerion stock recently. He also made several purchases last year. What’s interesting, however, is that these recent purchases are much larger than his purchases last year. And they are at much higher prices as well. This indicates that Gostner is very confident in relation to the outlook for the stock. It’s worth noting that these purchases have increased the size of his holding to 51,683 shares from 24,688 shares. This is a significant increase.
It’s also worth noting that Gostner has a very high 2iQ Trading IQ. His long-term Trading IQ is 142. This tells us that he has a great track record when it comes to timing his transactions well.
Alerion’s recent full-year results showed strong growth compared to 2019. For 2020, revenues came in at €109.3 million, up 52% year on year. Meanwhile, net profit was €31.6 million, up 48% year on year. At year end, gross installed capacity was around 751 MW versus 564 MW a year earlier while electricity production was more than 1 TWh (0.7 TWh in 2019). On the back of these strong results, the group proposed a dividend of 28 euro cents per share.
Looking ahead, Alerion said that it will continue to implement the development plan set out in the 2021-2023 Business Plan, through the pursuit of targeted organic and external growth opportunities, with the aim of increasing the installed power of the plant portfolio both in Italy and abroad, particularly in Romania and Spain.
In light of this strong growth, we see the insider buying here as a bullish signal.