Top-level corporate insiders have deep insight into their companies’ operations. If they’re buying company stock, it can be a sign that the stock has upside potential.
In this article, we are going to highlight a large insider purchase at CIE Automotive SA (CIE:SM). CIE is a Spanish supplier of components and sub-assemblies to the automotive market. It is listed on the Madrid Stock Exchange and currently has a market capitalization of €2.6 billion.
CIE Automotive: insider buying
Our records show that on 20 November, CIE’s vice-Chairwoman Goizalde Egana Garitagoitia purchased 85,450 shares in two transactions. The average price she paid for these shares was €20. In total, the insider spent €1.7 million on CIE Automotive stock.
This insider activity looks interesting for a number of reasons. Firstly, Garitagoitia has spent a substantial amount of money on stock. This indicates that she is confident about the future.
Secondly, Garitagoitia is a representative of Elidoza Promocion de Empresas, which is one of CIE Automotive’s largest shareholders. Given her background, it’s likely that she has a thorough understanding of CIE’s financials and future prospects.
CIE Automotive recently posted an encouraging update which showed that the company is recovering from Covid-19 disruption quickly. In the update, CIE advised that production in the third quarter was 85% of normal levels (90% in September) and that this had allowed the group to “generate significant profits again.” Overall, for the first nine months of the year, the company’s turnover was €2 billion and its net profit was €118 million.
Looking ahead, CIE said that it expects to hit pre-Covid 19 profitability levels in the fourth quarter, and that this will allow it to continue with its shareholder compensation policy. In light of these results, and the recovery the group is making from Covid-19, we see the insider buying here as bullish.