Corporate executives and directors tend to have superior 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 Canadian National Railway Co (CNR:CN). Canadian National Railway is a leading North American transportation and logistics company that operates approximately 20,000 route-miles spanning Canada and mid-America. Annually, it transports more than CAD $250 billion worth of goods. The company is listed on the Toronto Stock Exchange and currently has a market capitalization of CAD $111.5 billion.
Canadian National Railway Co: Insider Buying
Our data shows that between March 24 and March 25, two insiders at CNR picked up stock. Those that bought shares were:
- Chairman Robert Pace (1,561 shares @ CAD 169.35 per share)
- Board member James O’Connor (579 shares @ USD 133.55 per share)
Combined, the two insiders spent around CAD $360,000 (approx. USD 290,000) on CNR stock.
This trading activity is worth highlighting due to the fact that Mr. Pace – who is an experienced businessman – has made well-timed purchases here in the past. Last September, the insider spent around CAD $7.3 million on stock when it was trading at $152.55. A month later, the stock was trading near CAD $170.
Additionally, we think it’s interesting that two insiders have snapped up stock within the space of a few days. This suggests that insiders are in agreement that the stock is undervalued right now.
Record Fourth Quarter
In January, Canadian National Railway posted a solid set of results for the fourth quarter of 2021.
For the quarter, revenue was up 3% to CAD $3,753 million. Meanwhile, operating income came in CAD $1,566 million, an increase of 11%, and a record for the fourth quarter. Operating ratio, defined as operating expenses as a percentage of revenues, was 58.3%, an improvement of 3.1 points. The group said that the results showed progress against its Strategic Plan and confirmed the value of long-term capital investments for a resilient and modern railroad.
Looking ahead, analysts at Cowen believe that the railroad companies could benefit from rising coal demand. In a research note published in late March, they noted that high oil prices have increased demand for coal and said that this should buoy railroad operators. They also raised their price targets for a number of railroad stocks including CNR.
In light of these developments, we see the insider buying here as a bullish indicator.