Insiders have the most up-to-date information on their companies and often also have a wealth of experience and knowledge that can help them evaluate their firms’ investment potential. If they are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight an interesting insider purchase at Cowen Inc (COWN:US). Cowen is a diversified financial services company that is headquartered in New York. Its services include investment banking, research, sales and trading, prime brokerage, global clearing, securities financing, and investment management. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $963 million.
Cowen Inc: Insider Buying
Our data shows that on November 26, board member Brett Barth bought 10,000 Cowen shares at a price of $35.85 per share. This trade cost the insider $358,466 and increased his holding to 99,880 shares.
Mr. Barth has a substantial amount of experience in the financial services industry. In 2000, he co-founded boutique wealth management firm BBR Partners and today he is still a Co-CEO, co-managing the firm and overseeing all investment and client activity. Prior to founding BBR, Mr. Barth was in the Equities Division at Goldman Sachs. This background means he is likely to have a good understanding of Cowen’s intrinsic value.
What caught our attention here is the size of the trade. Our records show that this is the largest insider purchase at Cowen since May 2019. The fact that Mr. Barth has made a purchase of this size suggests that he is confident the stock is set to move higher.
Cowen’s recent Q3 results showed that the group has a lot of momentum right now.
For the quarter, the group posted revenue of $412.2 million, up from $321.3 million a year earlier. Meanwhile, earnings per share came in at $1.32, up from $1.25 and above analysts’ estimate of $1.22. It was a record quarter for Capital Markets Advisory and M&A Advisory as well as for share repurchases, with the company buying back $52.4 million worth of stock during the period.
"Our record M&A advisory and capital markets advisory revenues, along with the resilience of our markets business, are clear demonstrations of the sustainability of our core earnings power. The increased breadth and depth of our capabilities across the firm and the strategic steps that we have taken to build out our business are delivering results," commented Chair and CEO Jeffrey M. Solomon.
Since these results, the group has announced that it has entered into a definitive agreement to acquire privately-held Portico Capital Advisors, a leading M&A advisory firm focused on the Verticalized Software, Data, and Analytics sector. This deal will further enhance Cowen’s investment banking business – which has seen its revenues grow more than four-fold since 2017 – by focusing on industries undergoing transformation.
In light of these developments, we see the insider buying here as a bullish indicator.