Corporate insiders have a huge information advantage over the rest of us. So when insiders are buying company stock, investors should take note.
In this article, we are going to flag some insider buying at Black Knight Inc (BKI:US). Black Knight is a provider of integrated software, data and analytics solutions to the mortgage and consumer loan, real estate, and capital markets industries. The company is listed on the New York Stock Exchange and currently has a market capitalization of $13.7 billion.
Black Knight Inc: insider buying
Our records show that between 2 December and 7 December, Black Knight board member Joseph Otting purchased BKI stock three times. In total, the insider purchased 5,605 shares, spending around $500,000 on stock.
Extensive industry experience
This insider purchase is interesting because Mr. Otting has extensive experience in the financial industry and the mortgage market. Previously, Mr. Otting was Comptroller of the Currency, a position for which he was nominated for in June 2017 and served until 29 May, 2020.
During this time, Mr. Otting also served as Acting Director of the Federal Housing Finance Agency, which oversees the government-sponsored enterprises Freddie Mac and Fannie Mae, from January 2020 through April 2020. Prior to this, he served as President and Chief Executive Officer of OneWest Bank. Given his industry experience, we see his large purchase of BKI stock as bullish.
Black Knight posted a good set of third-quarter results in November. While revenues were only up 4.5% year on year, net earnings and diluted EPS were up 243% and 228% respectively. Net earnings margin was 36.7% compared to 12.5% in the prior year quarter. Meanwhile, Data and Analytics EBITDA was $18.3 million, an increase of 74% year-over-year.
“Our third-quarter results highlight the ongoing strength of our core business as we continue to execute on our strategic growth initiatives,” said Black Knight Chairman Bill Foley. “The acquisition of Optimal Blue and sharp focus on delivering innovative solutions to transform the industry gives us confidence that we can continue to create superior shareholder value over the long-term” added CEO Anthony Jabbour.
In light of this jump in profits and the confident tone from management, we see the insider purchases here as bullish. They suggest that Mr. Otting expects the stock to rise.