Insider buying can provide valuable clues about a stock’s potential. Insiders may sell their company’s stock for a variety of reasons. But they only buy stock for one reason – they expect it to go up.
Here, we are going to highlight a large insider purchase at Atea ASA (ATEA:NO). Atea supplies IT infrastructure and related solutions for businesses and public sector organizations in the Nordic countries and Baltic regions. It’s listed on the Oslo Stock Exchange and currently has a market capitalization of NOK15.7 billion.
Atea ASA: Insider Buying
Regulatory filings show that on 11 February the Chairman of Atea, Ib Kunoe, purchased 1.172 million ATEA shares at a price of NOK 137.50 per share. This purchase cost the insider NOK 161 million (approx. $19.1 million).
Kunoe is an experienced investor in the IT sector and has decades of experience as an entrepreneur. He is the founder of Consolidated Holdings A/S. As well as this he is the main shareholder in a number of companies such as Netop Solutions and Columbus IT A/S. His deep knowledge of the sector means he is likely to have a good understanding of the company’s future prospects.
The purchase also looks interesting due to its size. Our data shows that this is the largest insider purchase for over two years. Our Insider Model views the purchase as bullish.
Atea’s latest Q4 results suggest that trading continues to be positive. Revenue for the quarter was NOK 11,676 million, up 14.4% year on year while EBIT grew strongly to NOK 387 million, a rise of 27.1% year on year. The company advised that it is in a healthy cash position, sitting on NOK 1.067 billion compared to NOK 657 million a year ago.
The outlook was positive as 60% of Atea’s revenue comes from the Public Sector where spend on IT infrastructure is likely to be maintained. The company commented that it “expects to steadily increase its operating profit through a combination of revenue growth, expansion in higher margin products and services, and tight control of operating expenses.”
On the back of this bullish news, we see this insider purchase as bullish. It indicates that the Chairman is of the opinion that momentum will continue within the business.