Clinigen Group PLC (CLIN:LN)
12-month performance: -27%
Insider activity: Bullish
Insider buying pattern: Purchases from multiple insiders including Chairman
Recent news: Good full-year results
Purchases from multiple insiders can be a sign that a stock is undervalued. This buying pattern, which is known as ‘cluster buying’, is one of the strongest signals in insider transaction analysis.
In this report, we are going to flag some recent cluster buying in a UK small-cap stock, Clinigen Group PLC (CLIN:LN). Clinigen is a global pharmaceutical and services company that provides medicines to healthcare professionals in over 100 countries. It’s listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £800 million.
Clinigen: director dealing
PDMR filings show that on 27 October, four insiders at Clinigen purchased stock. These were:
● Chairman Peter Allen (5,000 shares)
● Independent Non-Executive Director Ian Nicholson (3,000 shares)
● Independent Non-Executive Director Anne Hyland (7,716 shares)
● Non-Executive Alan Boyd (7,000 shares)
Combined, these insiders spent around £140,000 on Clinigen shares.
Source: 2iQ Research
This cluster buying is worth highlighting for a couple of reasons. Firstly, these purchases represent the largest amount of insider buying at Clinigen for several years. This indicates that insiders are very confident that the stock is undervalued at present.
Secondly, previous cluster purchases at Clinigen have been timed well. The last time we observed a cluster purchase here was on 23 March, when three insiders bought stock near the 400p level. In the next two months, the share price roughly doubled.
Good full-year resultsClinigen posted a good set of full-year results on 17 September. For the year ended 30 June, revenue was up 15% and EBITDA was up 31%. Earnings per share came in at 65.6p, 20% higher than the figure in the previous year.
During the year, the group was impacted by Covid-19 to a degree. However, it said that its diversified business model had adapted well to the pandemic and that the impact of Covid-19 in the current financial year was less than in Q4.
“Looking forward, the impact from these headwinds is expected to reduce throughout FY21, before growth accelerates from further expected market share gains for our services businesses,” said CEO Shaun Chilton. "We remain confident in achieving our objectives for FY21. For the longer term, we have the pillars of the business in place for accelerated growth from FY22," he added.
Given the group’s confidence in the outlook, we see the director dealing here as a bullish signal.