If a CEO is buying company stock, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
In this report, we are going to highlight a CEO purchase at Bergman & Beving AB (BERGB:SS). Bergman & Beving is a Swedish supplier of industrial consumables and components to the industrial and construction sectors in the Nordic region. Its products include hand tools, metal and woodworking machinery, compressed air technology, personal protective equipment, fastening elements, screws, electrical devices, and more. The company is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalization of SEK 4.3 billion.
Bergman & Beving: Insider Buying
Our insider transaction data shows that on 15 July, Bergman & Beving President & CEO Magnus Soderlind bought 100,000 BERGB shares at a price of SEK 155.70 per share. This purchase cost the insider SEK 15.6 million (approx. $1.8 million).
100% Increase in Holding
This trade stands out for a couple of reasons. Firstly, it is large in size. Our records show that it is the largest purchase from an insider at Bergman & Beving for several years.
Secondly, the purchase has increased the size of Soderlind’s holding by 100%. The fact that the insider has doubled the size of his holding suggests that he is very confident that the stock is set to rise.
It’s worth noting that insiders at Bergman & Beving have timed purchases very well in the recent past. In March, for example, a number of insiders bought stock at prices between SEK 103 and SEK 127. Since then, the stock has risen to SEK 156.
20% Increase in Net Profit
Bergman & Beving posted a solid interim report for the three months to 30 June earlier this month. For the period, revenue rose by 9% to SEK 1,193 million while net profit rose by 20% to SEK 48 million. Earnings per share climbed to SEK 1.80 from SEK 1.50 in the prior-year period. The company noted that recent acquisitions had gone to plan and made positive contributions to the results for the quarter.
Looking ahead, the company was optimistic about the future. “Demand in our main markets is expected to remain strong,” said Soderlind. “We will continue to improve our earnings through our decentralized governance model, maintaining clear objectives in each company while acquiring highly profitable operations with strong niche positions. All told, this gives me great hope for Bergman & Beving’s future,” he added.
In light of these results and the outlook, we see the insider buying here as a bullish indicator.