Corporate executives and directors tend to have a superior level of information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.
In this report, we are going to highlight some interesting insider buying at Cairo Communication S.p.A. (CAI:IM). Cairo Communication is an Italian media and publishing company based in Milan. Its business is divided into three main areas: publishing, advertising, and internet search. The company is listed on the Borsa Italiana and currently has a market capitalization of €254 million.
Cairo Communication: Insider Buying
Our records show that during October, Founder and Chairman Urbano Roberto Cairo has purchased CAI stock on several occasions. On October 12, the insider picked up 120,000 shares at a price of €1.79 per share. Then, on October 13, he added another 280,000 shares at a price of €1.86 per share. These two purchases cost the insider a total of €735,600.
It’s unlikely that anyone has more information on Cairo Communication than Urbano Roberto Cairo. Since founding Cairo Pubblicità S.p.A. in 1995, he has been involved in the constant expansion of the group including the launch of Cairo TV S.p.A. in 1997, the acquisition of internet search engine Il Trovatore in 2000, and the purchase of television network La7 in 2013.
What stands out about this trading activity from Mr. Cairo is the size of the purchases. His trade on October 13 represents his largest purchase since mid-2016. This suggests he is very confident the stock is undervalued at present.
Strong H1 Growth
Cairo Communication’s recent H1 results showed strong growth.
For the period, gross consolidated revenues amounted to €583.3 million versus €458.6 million a year earlier, while EBITDA came in at €80.7 million versus €11.6 million in H1 2020. Net profit was €24.5 million versus negative €12.7 million in H1 2020.
During the period, the group managed to strengthen its balance sheet significantly. At June 30, net debt stood at €30.3 million, down from €63.2 million at the end of 2020. This reduction in debt came despite the fact that the group paid out dividends of €11.6 million during the half.
“The Cairo Communication Group's half-year report confirms important growth results for revenues and margins,” commented Mr. Cairo. “I am particularly satisfied with the further reduction in net financial debt to around 30 million euros, which confirms our strong cash generation capacity,” he added.
In light of these strong results, we see the insider buying here as a bullish indicator