One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
In this report, we are going to highlight cluster buying at Banca Ifis SpA (IF:IM). Banca Ifis is a highly specialized Italian bank. It is one of the main players in the Italian non-performing loan (NPL) market and is a leader in the unsecured small-ticket segment. The company is listed on the Borsa Italiana and currently has a market capitalization of €925 million.
Banca Ifis: Insider Buying
Our data shows that between 27 September and 1 October, three insiders at Banca Ifis bought stock. Those who snapped up shares were:
● Group Capital Markets Director Saverio Bonavita (7,950 shares)
● Group Legal and Corporate Affairs Director Lucia Martinoli (3,000 shares)
● Board member Ricardo Preve (91,388 shares)
The three insiders paid between €15.98 and €16.99 for their shares and in total, spent around €1.7 million on stock.
Bullish Cluster Buying
There are several things that stand out about this cluster buying pattern.
The first is that the insiders have spent a substantial amount of money on stock. This suggests they are very confident the stock is set to move higher.
The second is that all three of these insiders are experienced in the industry. Previously, Mr. Bonavita was CFO of Unipol Banca for over 10 years. Meanwhile, Ms. Martinoli previously served at Banca Popolare di Intra, Veneto Banca Group, and Intesa Sanpaolo. Mr. Preve is currently Chairman of the Board of Directors of Ifis Rental Services S.r.l. – a rental company that is 100% owned by Banca Ifis.
The third is that these three insiders have timed their purchases well in the recent past. Back in June and July, all three picked up stock when it was trading around the €13 level. Since then, it has risen to €17.
So, overall, this cluster buying pattern looks very bullish.
Banca Ifis’ half-year results showed that the company is making a strong recovery after Covid-19.
For the period, net banking income grew 38% to a record €292.6 million on the back of a strong performance in the NPL and Commercial & Corporate Banking segments. Meanwhile, cash recoveries on NPL portfolios also reached an all-time high at €170 million. The group advised that at the end of the period, its liquidity position was solid, with approximately €1.9 billion in reserves and free assets that can be financed by the ECB at 30 June 2021 (liquidity coverage ratio above 1,700%).
"The results of the first half of the year confirm the solidity of our business model, which was able to immediately take advantage of the improvements in the macroeconomic context," said CEO Frederik Geertman.
Looking ahead, the group said that for 2021, it expects to generate net interest and other banking income in the range of €540 to €560 million and operating profit in the range of €80 to €90 million, assuming a gradually improving macroeconomic environment.
“I am firmly convinced of the bank's ability to generate sustainable and recurring profits,” said Mr. Geertman.
Putting this all together, we see the insider buying here as a bullish indicator. The company has momentum at present and insiders clearly expect the share price to rise.