Insider Buying

Insider Buying Report: Associated British Foods PLC (ABF:LN)

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Associated British Foods PLC
12 months:
Large purchase from Chairman
Issued full-year results

Top-level corporate insiders such as CEOs and Chairmen have deep insight into their companies’ operations. If these insiders suddenly buy a large amount of company stock, investors should take note.

In this report, we are going to highlight a substantial insider purchase at Associated British Foods PLC (ABF:LN). Associated British Foods is a diversified international food, ingredients, and retail group with operations in over 50 countries. It’s listed on the London Stock Exchange and currently has a market capitalization of £13.3 billion.

Associated British Foods: director dealing

An insider transaction that has caught our attention here is a large purchase from Chairman Michael McLintock. Our records show that on 3 November, the insider purchased 9,000 ABF shares at a price of £17.18 per share. The total cost of the purchase was £154,620. This was his first purchase since April 2018.

ABF-LN(chart)     Source: 2iQ Research

The largest insider purchase in years

This director deal is worth highlighting due to its size – it is a substantial purchase both in nominal and relative terms. It has increased the size of his holding from 15,000 shares to 24,000 shares – an increase of 60%. Our data tells us that this is the largest insider purchase at Associated British Foods for several years. The size of the purchase suggests that the Chairman – who has a background in investment management – strongly believes the stock is undervalued at present.

Covid-19 hit

Associated British Foods has been impacted significantly by Covid-19 this year.

Its full-year results for the year ended 12 September showed a 12% decrease in group revenue and a 41% drop in adjusted earnings per share. No dividend was declared for the year.

However, the group advised that it has the people and the cash resources to meet the challenges ahead. It also said that it expects sales and profits from its Primark stores to be higher next year.

Clearly, the Chairman believes the company can turn things around post-Covid-19. His purchase suggests that he thinks the stock, which is down 35% year to date, will rebound. We see this insider purchase as a bullish signal.