When a CEO is spending millions on company stock, we always take a closer look. CEOs tend to be way ahead of analysts and portfolio managers when it comes to business trends and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at CNH Industrial NV (CNHI:IM). CNH Industrial is a leading capital goods company which, through its various businesses, designs and manufactures agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles, in addition to a broad portfolio of powertrain applications. The group has a presence in all major markets worldwide and is focused on expanding its presence in high-growth markets. It is listed on both the Borsa Italiana and the New York Stock Exchange and currently has a market capitalization of €19.8 billion.
CNH Industrial: Insider Buying
Our data shows that on 15 September, CNH Industrial’s CEO Scott Wine bought 200,000 shares at a price of $16.39 per share. This transaction cost the insider approximately $3.3 million.
Mr. Wine – who joined CNH Industrial in January – has extensive experience in the industrial industry. Prior to joining CNH, he was Chairman and CEO of Polaris Inc., a manufacturer of off-road vehicles, electric cars, motorcycles, snowmobiles and boats. Before this, he served at UTC Fire and Security and Jacobs Vehicle Systems. So, he is likely to have a good read on the industry.
What stands out about this recent transaction is the size of the purchase. The fact that Mr. Wine has spent over $3 million on company shares suggests that he is very confident in relation to the outlook for the stock. Our data shows that this is the largest insider purchase at CNH for years.
Strong Q2 Results
CNH Industrial’s recent Q2 results were strong.
For the period, the group reported consolidated revenues of $8.9 billion, up 60% year on year. Meanwhile, adjusted net income came in at $583 million versus an adjusted net loss of $85 million a year earlier. Free cash flow was $1.0 billion. The order book in the group’s Agriculture segment more than doubled year over year, while truck order intake in Europe was up 150% year over year.
Looking ahead, the company said that it expects solid demand to continue across regions and segments. It anticipates higher raw material, freight and logistics costs to be partially offset by positive price realization. For the 2021 year, the group expects net sales growth of between 24% and 28% along with free cash flow in excess of $1.0 billion.
“Our industry is clearly in a cyclical upturn and the sound fundamental performance of our businesses and operations is enabling us to capture much of the benefit. CNH Industrial is poised for a noteworthy second half and an even brighter future,” said Mr. Wine.
In light of these strong results, we see the insider buying activity here as a bullish indicator.