There are two main reasons insiders invest in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the company expect the company’s share price to rise.
In this report, we are going to highlight an interesting insider purchase at Black Knight Inc (BKI:US). Black Knight provides integrated software, data, and analytics services to the financial industry. Its solutions, which are aimed at the mortgage and consumer loan, real estate, and capital markets industries, facilitate and automate many of the business processes across the homeownership life cycle. The company is listed on the New York Stock Exchange and currently has a market capitalization of $8.2 billion.
Black Knight Inc: Insider Buying
Our data shows that on February 17, Black Knight board member Joseph Otting bought 3,440 BKI shares at a price of $58.10 per share. This trade cost the insider around $200,000 and increased his holding to 7,746 shares.
Mr. Otting has extensive experience in the financial services industry and the mortgage market. Previously, he was Comptroller of the Currency and served as Acting Director of the Federal Housing Finance Agency, which oversees the government-sponsored enterprises Freddie Mac and Fannie Mae. Prior to this, he served as President and Chief Executive Officer of OneWest Bank. Given his industry experience, he is likely to have a good understanding of Black Knight’s prospects.
What stands out about this trade is that it has increased the size of the insider’s position by 80%. The fact that Mr. Otting has increased his holding by such a large percentage suggests he sees a lot of value in the stock at present.
Solid Q4 Results
Black Knight’s recent Q4 2021 results were solid.
For the period, revenue came in at $386.2 million, an increase of 13% year on year with organic growth of 11%. Meanwhile, operating income amounted to $82.9 million, an increase of 32% year on year, with the operating margin rising from 18.3% to 21.5%. Adjusted earnings per share for the period were $0.66, up 10% year on year.
"We are proud to have delivered an outstanding fourth quarter that closed out an outstanding year,” commented Chairman and CEO Anthony Jabbour. "We enter 2022 with significant momentum following a record sales year in 2021 and with laser focus to continue our strong execution of our strategic initiatives," he added.
Looking ahead, the group advised that for 2022, it expects revenue of between $1,593 million and $1,612 million, and adjusted EPS of between $2.63 and $2.72. That would represent growth of 8-9% and 11-14% respectively.
Since these results, Black Knight’s share price has taken a bit of a hit. The large purchase from Mr. Otting suggests that he expects the stock to bounce back. We see the insider buying here as a bullish indicator.