ASOS PLC (ASC:LN)
12-month performance: +49%
Insider activity: Bullish
Insider buying pattern: Large purchase from Independent Director
Recent news: Strong full-year results
Company insiders tend to have the most up-to-date information on their companies’ future prospects. If they’re buying shares, it’s often a positive development.
Here, we are going to highlight a large Independent Director purchase at ASOS PLC (ASC:LN). ASOS is an online fashion retailer that operates internationally. The company sells approximately 85,000 branded and ASOS brand products primarily on asos.com. It’s listed on the London Stock Exchange’s AIM market and currently has a market capitalization of £4.8 billion.
ASOS PLC: insider buying
Regulatory filings show that on 20 October an Independent Director of ASOS, Luke Jensen, purchased 3,938 shares at a price of £50.70 per share. This purchase – which cost the insider approximately £200,000 – boosted his holding by 40%.
Source: 2iQ Research
Strong insider track-record
This Independent Director purchase looks very interesting. Firstly, when ASOS insiders have bought stock in the recent past, the share price has tended to rise significantly in the following months. Jensen last bought ASOS stock in May and the share price has nearly doubled since.
Secondly, this is a substantial purchase from the insider, which is what we are looking for. It suggests Jensen is confident in ASOS’ share price performance going forward.
Strong full-year resultsASOS recently posted strong full-year results. Group revenues grew 19% to over £3.26 billion. Pre-tax profits rose by 329% to £142.1m. The shares have fallen back circa 10% from their recent highs on a cautious outlook, however. The company is concerned that Covid-19 will restrict demand for their party wear which will impact gross margin. Despite this, ASOS believes profits will continue to rise over the next year and the company has proved to be very reactive when dealing with changes in demand and trends. Historically pull-backs in the share price have represented a buying opportunity.
Given this strong update, we see the insider buying here as a bullish signal. It suggests that the Independent Director expects buoyant trading at ASOS to continue.