Company insiders are often armed with the most up-to-date information on their companies’ prospects. If they’re buying shares, it’s generally a positive development.
Here, we are going to highlight insider trades at BT Group PLC (BT/A:LN). BT Group provides communications products and services in the United Kingdom, Europe, the Middle East, Africa, the Americas, the Asia Pacific, and Internationally. It’s traded on the London Stock Exchange and currently has a market capitalization of £16.8 billion.
BT Group PLC: Insider Buying
Regulatory filings show that on 14 May, the CEO of BT Group, Philip Jansen, purchased 1.25 million BT/A shares at an average price of £1.63 per share. This purchase cost the insider approximately £2,000,000 and increased his holding by around 23%. Then, on 17 May, a Non-Executive Director, Sara Weller, purchased 30,000 BT/A shares at a price of £1.64. Following that, on 18 May, the Chief Executive Officer-Enterprise, Robert Shuter, purchased 587,509 BT/A shares, spending a total of around £1,000,000.
This insider trading activity caught our attention because the CEO’s purchase is large in monetary terms and has increased the size of his holding by a significant amount. It sends out a signal to investors that he is very confident in the future prospects of BT Group. The presence of other insider purchases at a similar time boosts this signal.
It’s worth noting that we produced an insider report in July last year which flagged multiple insider transactions at BT Group, including a purchase from Jansen. These transactions occurred at levels well below the current price. So, Jansen appears to have a good read on the stock.
BT Group recently produced full-year results that were in line with guidance. For the year, revenue came in at £21.3 billion while adjusted EBITDA came in at £7.4 billion.
Looking ahead, management was optimistic about the future. The company expects adjusted EBITDA to increase to between £7.5 billion and £7.7 billion this financial year. Meanwhile, it expects to resume dividend payments next financial year.
“After a number of years of tough work, and as we look to build back better from the pandemic, we're now pivoting to consistent and predictable growth. We are building a better BT for our customers, for the country, for our shareholders and for those who work for this great company - now and in the future,” said Philip Jansen, Chief Executive.
On the back of these results, a number of brokers raised their price targets for the stock. Barclays raised its price target to 190p from 170p while Bank of America upgraded the stock to a buy with a price target of 200p.
Given this reassuring set of results and the positive outlook statement, we see the recent insider buying as bullish. It suggests that the insiders see the shares as undervalued and that they expect the share price to continue to rise in the future.