Insider transaction activity can provide powerful clues in relation to a stock’s future direction. No one has more insight into a company, and its prospects, than its leaders.
In this report, we are going to look at some interesting recent insider transaction activity at Andritz AG (ANDR:AV). Andritz is an Austrian company that provides plants, systems, equipment, and services to various industries. It is listed on the Vienna Stock Exchange and currently has a market capitalization of €3.1 billion.
Andritz AG: insider buying
Our records show that in the second half of September, CEO Wolfgang Leitner purchased a large number of call options on Andritz stock. Between 17 September and 24 September, the insider purchased call options on Andritz stock six times.
Additionally, on 30 September, Joachim Schoenbeck, a member of the Executive Board, purchased 4,000 shares, spending €105,600 on stock.
Source: 2iQ Research
We see this insider transaction activity as bullish. Leitner joined Andritz in 1987 as CFO, and has served as President and CEO since 1994. It’s likely that he knows the company, and industry, very well. This purchase of call options indicates that he expects the stock to rise. The purchase of shares from Schoenbeck suggests that he is also confident that the share price will rise.
Andritz has shown largely solid business development recently despite the challenging economic environment. For example, in September, the group advised that it had received an order from Guangxi Sun Paper Co. Ltd., part of the Sun Paper Group, to supply a chemi-thermomechanical pulping system for its new mill in Beihai, Guangxi, China.
Meanwhile, in early October, the company announced that it had received a contract from Greenko Energy Private Limited, an independent Indian power producer, for the supply of electro-mechanical equipment for the 1,200-MW Pinnapuram pumped storage plant.
As a result of this progress, analysts at JP Morgan raised the stock to ‘overweight’ from ‘neutral’ with a price target of €40.
In light of these developments, we see the insider transaction activity here as bullish. Insiders clearly expect the stock to rise.