Bigblu Broadband (BBB:LN)
12-month performance: -15%
Insider activity: Bullish
Insider buying pattern: Purchases from multiple insiders including Chairman
Recent news: Disposed of UK and European satellite broadband operations for £39 million
Research on insider transaction activity shows that following insider buying at smaller companies tends to be a more profitable strategy than following insider buying at larger firms. Smaller companies are less researched than larger companies, meaning that they are often less efficiently priced.
In this report, we are going to highlight insider buying at a UK small-cap company, Bigblu Broadband PLC (BBB:LN). Bigblu Broadband is a telecommunications company that provides broadband solutions for consumers and businesses. It’s listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £57 million.
Bigblu Broadband: insider buying
In the last week, we have observed two interesting insider purchases at Bigblu Broadband. The first was a large purchase from Harwood Capital Management on 13 October. Harwood Capital Management is a UK investment manager that was founded by Christopher Mills, who sits on the board at Bigblu Broadband. This purchase was for 2.898 million shares at a price of £0.78 per share.
The second insider purchase of note was a buy from Chairman Michael Tobin on 14 October. Our records show that he purchased 8,000 BBB shares at a price of £0.80 per share.
Source: 2iQ Research
This insider activity is worth highlighting for a couple of reasons. Firstly, Harwood Capital Management’s purchase is quite large. It has increased the size of the investment manager’s holding by 22%.
Secondly, Tobin is a highly successful serial technology entrepreneur and pioneer with over 30 years’ experience in the telecoms and technology sector. Previously, he was CEO of TelecityGroup plc, a leading FTSE 250 technology company. The fact that he is increasing his position here is a positive development.
Growth opportunitiesBigblu’s recent performance has been impacted by Covid-19. For the half year to 31 May 2020, revenue was £25.8 million, down from £30.5 million in H1 2019. Meanwhile, adjusted EBITDA was £3.1 million, down from £5.1 million in H1 2019.
However, since 31 May, the company has disposed of its UK and European satellite broadband operations to Eutelsat S.A. for an aggregate consideration of £39.3m. It believes it is well placed for growth as a result.
"We remain extremely excited by the growth potential of the continuing group and believe that the company is well-placed to generate further value for shareholders. Following completion of the disposal, the company will be in a position to pay down debt, return to a net cash position of c.£6 million and accelerate investment and growth opportunities" CEO Andrew Walwyn said in late August.
In light of this deal, we see the insider buying here as a bullish signal. It suggests that insiders are confident about the future.