Investors are often rewarded by following signals that key insiders create. A top-level insider will often have information that outsiders do not have access to, as well as a greater understanding of their company. If these insiders are buying stock, investors should take note.
Here, we are going to highlight a large insider purchase at CanWel Building Materials Group Ltd (CWX:CN). CanWel Building Materials is a Canadian company that distributes building materials and home renovation products in Canada, Hawaii, and the Western United States. It’s listed on the Toronto Stock Exchange and currently has a market capitalization of CAD $626 million.
CanWel Building Materials Group: Insider Buying
Regulatory filings show that on 28 January the Chairman of CanWel Building Materials Group, Amardeip Doman, purchased 2,000,000 CWX shares at a price of CAD $7.64 per share. This purchase cost the insider CAD $15.28 million.
High Insider Score
This Chairman purchase looks interesting for a couple of reasons. Firstly, this is a significant purchase in monetary terms which suggests the insider is confident in the company’s future prospects.
Secondly, our data shows that this is the largest insider purchase at CanWel in several years. Our Insider Model views insider sentiment at CanWel as very positive.
Covid-19 has been beneficial to CanWel Building Materials Group as demand for their home improvement products has increased with more people staying at home.
Revenues in Q3 increased by 26.5% to CAD $472.2 million. Total loans and borrowings fell by 25% with net earnings coming in at CAD $31 million. Gross margin increased to a record 18.4% versus 14% in Q3 2019.
“We are extremely pleased and encouraged with the continued momentum and increase in demand across a variety of our end-markets, which, combined with robust pricing, has led to yet another record quarter across all of our key financial metrics,” said the company’s CEO.
In light of this strong Q3 update, we see the insider buying here as a bullish signal. It suggests that the Chairman believes the positive trading momentum at CanWel Building Materials Group will continue.