If multiple insiders have bought company stock within a short period of time, it can pay to take a closer look. This buying pattern – which is called ‘cluster buying’ – is a particularly strong insider transaction signal.
Here, we are going to highlight some recent cluster buying at CI Financial Corp (CIX:CN). CI Financial is a Canadian wealth management company that provides a broad range of services to high-net-worth individuals, families, and businesses. It is listed on the Toronto Stock Exchange and currently has a market capitalization of CAD $3.5 billion.
CI Financial: Insider Buying
Our records show that between 14 January and 22 January, three insiders at CI Financial purchased CIX shares. Executive Chairman William Holland was the largest buyer of stock. He bought a total of 250,000 shares, spending around CAD $4 million. Meanwhile, Directors William Butt and Tom Muir purchased 60,000 shares and 15,000 shares respectively.
We see this pattern of buying as bullish for a couple of reasons. Firstly, the insiders have purchased a large amount of stock. Our data shows that this buying activity represents the largest amount of insider buying at CI Financial within a quarter for several years.
Secondly, all three of these insiders have increased their positions substantially. Holland’s purchases, for example, have increased his holding from 306,920 shares to 556,920 shares. That represents an increase of 81%. This tells us that these insiders are confident about the future.
Third, these insiders are all highly experienced. Holland has been with CI Financial since 1989 and was CEO for 10 years between 1999 and 2009. Butt, meanwhile, was previously Global Head of Investment and Corporate Banking and BMO Financial.
Record Assets Under Management
CI Financial recently advised that at 31 December 2020, its assets under management stood at $134.9 billion while its wealth management assets stood at $96.6 billion. This represented increases of 91% and 27% year over year respectively, and new record highs.
The company also said that it had completed a successful USD $700 million bond issue in December and announced the early redemption of all of the outstanding CAD $200 million principal amount of 2.775% debentures due 25 November 25 2021
“I believe the strong demand for this latest offering represents a vote of confidence in CI, our strategy and the outlook for the company,” commented Kurt MacAlpine, CI’s CEO.
In addition, the company stated that late last year, it completed the acquisition of four US wealth management firms, giving it a presence in four large and vital markets.
In light of this update, we see the cluster buying here as a bullish signal.