Insider buying can provide investors with valuable clues in relation to a stock’s potential. Insiders sell company stock for a number of reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some insider buying at Boohoo Group PLC (BOO:LN). Boohoo is a UK online fashion retailer that owns a number of popular clothing brands including Boohoo, BoohooMAN, PrettyLittleThing, and Nasty Gal. It is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £4.25 billion.
Boohoo: Insider Buying
Our data shows that on 26 February, Non-Executive Director Iain McDonald purchased 100,000 BOO shares at a price of £3.35 per share. This transaction – which cost the insider £335,000 – increased the size of his holding by 19%.
This director deal is notable for a couple of reasons. Firstly, McDonald has significant investment management expertise. Currently, he is Partner and CIO at Belerion Capital, an investment advisory firm. Prior to forming Belerion, he worked at William Currie Group, Numis, and Charterhouse. At Numis, he was the UK’s leading retail and e-commerce analyst.
Secondly, McDonald’s last few trades have been timed well. His last trade, for example, was a purchase of 50,000 Boohoo CFDs at a price of £2.27 on 16 July 2020. After that trade, Boohoo’s share price rose around 70% in the next 10 weeks.
Boohoo posted a very strong trading update in January for the four month-period ended 31 December 2020. For the period, total group revenue was up 40% year on year. As a result of this performance, the group updated its full-year guidance, stating that it now expects full-year revenue growth of 36% to 38% for the year to 28 February 2021, up from previous guidance of 28% to 32%.
Since then, the company has announced a number of major acquisitions. In late January, the company announced the acquisition of the Debenhams brand. Debenhams is a long-standing UK fashion and beauty retailer with high brand awareness, and an established online platform with approximately 300 million UK website visits per annum. Then, in February, it announced the acquisition of the Dorothy Perkins, Wallis and Burton Brands – which had over two million active customers combined in 2020.
In light of these developments, we see the director dealing at Boohoo as a bullish signal.