CEOs tend to have a deep level of insight into their companies’ operations. If these insiders are buying company stock, it’s generally a sign that business performance is strong and that the outlook for the stock is positive.
In this report, we are going to highlight a CEO purchase at Alm. Brand A/S (ALMB:DC). Alm. Brand is a financial services company that is focused on the Danish Market. Non-life insurance is the group’s core business, however, it also provides life insurance, banking, and investment services. The company is listed on the OMX Nordic Exchange Copenhagen and currently has a market capitalization of DKK 7.4 billion.
Alm. Brand: Insider Buying
Our insider transaction data shows that this month, Alm. Brand Group CEO Rasmus Werner Nielsen has purchased stock twice. On 17 June, the insider bought 241,850 shares at a price of DKK 48.26 per share. Then, on 18 June, he added another 265,000 shares at a price of DKK 48.09 per share. Combined, these purchases cost the insider around DKK 24.4 million (approx. USD $3.9 million).
This insider trading activity stands out due to its size. The fact that Mr. Nielsen has spent nearly $4 million on shares suggests that he is very confident that ALMB stock is set to move higher. Our records show that these purchases are the largest insider purchases at Alm. Brand for several years.
It’s worth noting that Mr. Nielsen has significant industry experience. Before joining Alm. Brand as CFO in 2017, he was CFO of Nordea Bank Denmark and Head of Group Business Control & Reporting of Nordea Group. So, he is likely to have a good read on the industry and his company’s future prospects.
Profit Guidance Upgraded
Alm. Brand’s recent first-quarter results were solid. For the period, the company generated a pre-tax profit of DKK 137 million against a profit on continuing activities of DKK 41 million in Q1 2020 with profit growth driven by better-than-expected performances in non-life insurance and life insurance. Diluted earnings per share for the quarter came in at DKK 0.7 versus DKK 0.2 in Q1 2020.
On the back of this solid performance, the group declared a dividend of DKK 8.00 (Q1 2020: DKK 0.00). It also raised its full-year profit guidance to DKK 650-700 million, against previous guidance of DKK 600-650 million.
In light of this upgrade to profit guidance, we see the insider buying from the CEO as a bullish indicator. It suggests that the insider is confident in relation to his company’s future prospects and that he expects the stock to rise from here.