If multiple insiders are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster buying pattern at BRP Group Inc (BRP:US). BRP is an independent insurance distribution firm that delivers tailored insurance and risk management solutions. The company operates through four segments: Middle Market, Specialty, MainStreet and Medicare. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.6 billion.
BRP Group Inc: Insider Buying
Our data shows that between May 13 and May 16, three insiders at BRP bought stock. Those who picked up shares were:
- CEO Trevor Baldwin (14,559 shares @ $22.75 per share)
- Chief Partnership Officer John Valentine (10,000 shares @ $21.10 per share)
- General Counsel Seth Cohen (2,500 shares @ $21.50 per share)
In total, the three insiders spent just under $600,000 on company stock.
This buying pattern is worth highlighting for a couple of reasons.
Firstly, two of these insiders have considerable investment experience. Before joining BRP in 2009, Mr. Baldwin worked at the private equity firm HealthEdge Investment Partners, LLC. Meanwhile, Mr. Valentine has more than 17 years of experience closing M&A, equity and debt transactions for public, private, and sponsor-owned clients across a number of industry sectors. This means that they are likely to have a good understanding of the company’s intrinsic value.
Secondly, this is not the only buying from insiders here recently. Our data shows that back in March, four insiders (including Mr. Baldwin and Mr. Valentine) spent around $900,000 on stock at slightly higher prices. This indicates that those within the company see a lot of value in the stock at the moment.
Good Q1 Results
BRP recently posted a good set of Q1 results.
For the period, revenue was up 59% year on year to $242.8 million with organic growth of 16%. Meanwhile, adjusted EBITDA rose 37% to $72.9 million. Diluted earnings per share came in at $0.39 versus $0.33 a year earlier.
“We enjoyed a strong start to 2022, growing revenue nearly 60%, highlighted by another quarter of double-digit organic growth across all four segments and the continued expansion of our ‘MGA of the Future’ platform,” commented Mr. Baldwin.
Looking ahead, management was optimistic about the future, stating that the recent acquisition of Westwood Insurance Agency will considerably accelerate many of its growth initiatives in the homeowners insurance market.
“We remain well positioned in this ever-changing economic and geopolitical environment to further deliver sustainable growth, increased profitability, and stakeholder value as we currently see our business performance accelerating into Q2,” said Mr. Baldwin.
In light of these results, and the comments from management, we see the insider buying here as a bullish indicator.