Top-level corporate executives have a deeper insight into their own company’s operations than any outside analyst or investor could ever hope to obtain. If they’re buying stock, it’s normally a bullish development.
Here, we are going to highlight an insider purchase at Berkeley Group Holdings PLC (BKG:LN). Berkeley Group is a UK-based property developer that focuses on the residential market. The company has six property developers in its portfolio that are based in Birmingham, London, and the South of England. It’s traded on the London Stock Exchange and currently has a market capitalization of £5.68 billion.
Berkeley Group Holdings PLC: Insider Buying
Regulatory filings show that on 2 July, a Non-Executive Director at Berkeley Group, William Jackson, purchased 14,000 BKG shares at a price of £47.12 per share. This purchase cost the insider around £660,000 and increased his holding by 1,300%.
This trade caught our attention due to its large size in monetary terms. Jackson’s first trade after he joined the company early in 2021 was a purchase of 1,000 shares. His most recent trade is much more significant in size and in investing £660,000 he is sending a signal that he is very confident in Berkeley Group’s future prospects.
It’s worth noting that Jackson has an investment background. The insider has been Managing Partner at private equity firm Bridgepoint since 2001. This means he is likely to be extremely adept at valuing companies. His experience in this field is impressive and something that investors should take note of.
Berkeley recently produced a solid set of full-year results. For the year ending 30 April, profit before tax came in at £518.1 million, an increase of 2.9%, while EPS was 339.4p per share, an increase of 4.5%. During the year, the company returned £334.1 million to shareholders via share buybacks and dividends which was up from £280.1 million in the year ending 30 April 2020. Net cash remained healthy at £1.128 billion and the value of the landholdings on the books of £6.884 billion was an increase of £467 million versus the year before.
Management was optimistic about the outlook. “Berkeley's unrivaled land holdings now have the capacity to deliver over 63,000 homes, of which over 70% are on our 29 large complex regeneration sites. 23 of these are now in production, underpinning the business plan for the next ten years. The next three years will see further investment in work in progress as more of these sites approach the point of delivery and we now have over 11,000 people working on our construction sites, more than prior to the pandemic, supporting Berkeley's planned 50% increase in delivery over the business plan period,” said Rob Perrins, the Chief Executive.
Having analyzed the latest results, we see the recent insider buying at Berkeley Group Holdings as bullish. The large nature of the insider purchase suggests that Jackson is very confident in the company’s future prospects and that he feels the market is undervaluing Berkeley Group shares.