Insider Buying

Insider Buying Report: Bellway Plc (BWY:LN)

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Bellway Plc
12 months:
Large purchase by Chairman
Full year results

A high-level company insider such as a Chairman will tend to have the most up-to-date information on their companies’ prospects. They will usually only buy stock for one reason – they expect the stock price to go up.

In this report, we are going to highlight a large purchase by the Chairman at Bellway PLC (BWY:LN). Bellway is a United Kingdom house builder. It’s listed on the London Stock Exchange and currently has a market capitalization of £3.05 billion.

Bellway: director dealing

Regulatory filings show that on 28 October the Chairman of Bellway, Paul Smith, purchased 3,914 BWY shares at a price of £23.12 per share. This purchase – which cost the insider approximately £90,000 – increased his stake by just under 24%.

bellway(chart)     Source: 2iQ Research

Solid track record

Our records show that the Chairman has only bought stock on a limited number of occasions over the last four years. Having picked up stock at £17.20 in 2016, he then picked up stock in March this year at £20.28 after the share price had a significant fall. It is therefore very interesting that he has stepped in at a share price of £23.12 to increase his stake by a significant amount. The size of the purchase suggests that the Chairman is confident Bellway’s prospects are improving and that the shares are undervalued.

Dividend payments resumed

Bellway recently revealed its preliminary full-year results which saw pre-tax profit fall by 64.3% to £236.7 million. There was light at the end of the tunnel, however, as overall reservations were up 30% in the nine weeks post 1 August. Significantly, dividend payments were resumed and a final dividend of 50p per share was proposed by the board. The company pointed to a strong forward order book and said it had seen “an encouragingly strong start to trading in the new financial year.”

After a tough period of trading the positive outlook is encouraging. Bellway’s share price, however, remains 25% below where it was at the turn of the year. The Chairman’s purchase of stock suggests that the shares are currently undervalued. We see this purchase as a bullish signal.