Insider Buying

Insider Buying Report: ASOS PLC (ASC:LN)

featured image
ASOS PLC
(ASC:LN)
12 months:
-49%
Activity:
Bullish
Pattern:
Large purchase from Chairman
News:
Full-year results
ASOS PLC
(ASC:LN)
12 months:
-49%
Activity:
Bullish
Pattern:
Large purchase from Chairman
News:
Full-year results

Insider transactions can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more information in relation to a company’s performance and prospects than its executives and directors.

In this report, we are going to highlight an insider purchase at ASOS PLC (ASC:LN). ASOS is an online fashion retailer that operates country-specific clothing websites in the UK, US, Europe, and Australia. In total, it sells over 85,000 branded and own-label products. The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £2.3 billion.

ASOS: Insider Buying

Our data shows that on October 12, 2021, ASOS’s Senior Independent Non-Executive Director and soon-to-be Chairman Ian Dyson bought 4,500 ASOS shares at a price of £23.17 per share. This purchase cost the insider £104,265 and increased his holding to 9,205 shares.

High-Conviction Purchase

This trade is worth highlighting for a number of reasons. Firstly, Mr. Dyson has increased the size of his position by 96%. This suggests he is confident in relation to the outlook for the stock. It’s worth noting that his purchase represents one of the largest insider buys at ASOS in recent years.

Secondly, this purchase took place a day after ASOS shares fell 13% on the back of the company’s full-year results. The timing of the trade indicates that Mr. Dyson sees value in the stock after the share price fall.

Third, Ex-CEO Nick Beighton made a smaller purchase (2,020 shares @ £24.63 per share) the day before this trade. So, Mr. Dyson is not the only insider that is confident the stock is set to move higher.

Short-Term Challenges

There were several negatives in ASOS’s full-year results that spooked investors.

For example, gross margin for the year was down by 2% to 45.4% on the back of elevated freight and Brexit-related duty costs, FX headwinds, and increased customer investment. ASOS said that it expects the supply chain pressures to continue throughout the first half of this financial year, resulting in constrained supply from its partner brands.

Another negative was the H1 revenue outlook. Revenue for the first half of this financial year is only projected to be up mid-single digits, which is very low for ASOS.

The company also announced that Nick Beighton would be stepping down as CEO. Right now, it doesn’t have a replacement lined up.

The results weren’t all bad, however. For instance, for the year to September 30, 2021, revenue was up 22% while total customers were up 13%.

Meanwhile, the company was relatively optimistic about its medium-term prospects. “We have a clear strategy and plan in place, a strong leadership team, and approach the future with confidence,” it wrote in its outlook statement.

Putting this all together, we see the insider buying here as a bullish indicator. It suggests that the soon-to-be Chairman expects the stock to recover.

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