Top-level insiders such as C-suite executives tend to have a good understanding of their companies’ prospects. If they’re buying company stock, it’s a sign that they’re confident about the future and that they expect to see share price upside.
In this report, we are going to highlight insider buying at CME Group Inc (CME:US). CME Group operates the world’s largest financial derivatives marketplace. Through its exchanges, it provides derivative products across a range of asset classes including equities, FX, metals, agriculture, energy, and crypto-assets. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $79.6 billion.
CME Group: Insider Buying
Our data shows that on November 4, Chairman and CEO Terrence Duffy bought 1,600 CME shares at a price of $220.21 per share. This trade cost the insider $352,000 and increased his holding to 80,908 shares.
Mr. Duffy is a 40-year veteran of the futures industry with considerable company experience. He has served as a board member at CME since 1995 and been Chairman since 2002. Since 2016, he has held the role of Chairman and CEO. Under Duffy's leadership, CME Group's average daily volume has risen from 2.2 million contracts per day in 2002 to 19.1 million contracts per day in 2020.
What stands out about this trade from Mr. Duffy is its size. Our records show that it’s the largest insider purchase at CME Group since 2012. The fact that the insider has spent over $350,000 on shares suggests that he’s confident the stock is set to rise.
Google Cloud Partnership
Earlier this month, CME Group signed a 10-year strategic partnership with Google Cloud in an effort to accelerate its move to the cloud and transform how global derivatives markets operate with technology.
Under the agreement, CME Group will migrate its technology infrastructure to Google Cloud, beginning with data and clearing services in 2022, and eventually move all of its markets to the cloud. The partnership will focus on delivering significant benefits to all market participants by expanding access, creating real-time data and analytics capabilities, introducing new products and services, and increasing efficiencies.
"Through this long-term partnership with Google Cloud, CME Group will transform derivatives markets through technology, expanding access and creating efficiencies for all market participants," said Mr. Duffy in relation to the partnership.
"Bringing together CME Group's best-in-class financial talent with Google Cloud's deep engineering expertise will help accelerate technological innovation in capital markets infrastructure," said Thomas Kurian, CEO, Google Cloud.
On top of forming the partnership with CME, Google has also made a $1 billion equity investment in a new series of non-voting convertible preferred stock of CME Group.
In light of these developments, we see the insider buying here as a bullish indicator. It suggests that the Chairman and CEO is confident in relation to the Google Cloud deal.