When a top-level insider makes a large purchase in their own company, investors should take note. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
Here, we are going to highlight an insider purchase by the CEO at Crest Nicholson Holdings PLC (CRST:LN). Crest Nicholson Holdings is a house builder based in the UK. Its main focus is on constructing residential properties in the south of England. It is traded on the London Stock Exchange and currently has a market capitalization of £824 million.
Crest Nicholson Holdings PLC: Insider Buying
Our insider transaction data shows that on January 27, the CEO of Crest Nicholson Holdings, Peter Truscott, bought 30,000 shares at a price of £3.08 per share. This cost the insider around £100,000 and increased his holding in the company by 10%.
Good Track Record
This insider trade interests us for a couple of reasons.
Firstly, Mr. Truscott has an impressive trading history and has demonstrated an ability to pick up company stock at attractive levels. Our insider transaction data shows that he picked up stock in July and September of 2020 at levels substantially below where the shares are currently trading.
Secondly, the CEO is a veteran of the house building sector which means it is likely that he knows the factors that drive the house building markets, inside out. Before his appointment as CEO of Crest Nicholson Holdings, he was CEO of house builder Galliford Try. He also worked at Taylor Wimpey for thirty years where he undertook the role of divisional Chairman.
Back on Track
Crest Nicholson Holdings bounced back from a tough 2020 to deliver a strong financial performance in full-year 2021.
Revenues of £786.6 million were up 16% on 2020 and adjusted gross profit jumped 54.8% to £166.7 million. Adjusted basic earnings per share of 34 pence were significantly higher than the 14.6 pence achieved the year before. The company did not declare a dividend in full-year 2020 and investors reaped the benefits of the improved results with dividends for full-year 2021 totaling 13.6 pence. The net cash figure of £252.8 million was considerably higher than the £142.2 million of net cash on the balance sheet at the end of the prior year.
In his strategy update, Mr. Truscott said the company had delivered on what it said it would achieve. The business now has an efficient, scalable operating platform with a robust balance sheet that will enable it to grow. An experienced leadership team is in place and build time of new houses has reduced by seven weeks. Mr. Truscott added that he is aiming to accelerate operating margin recovery and drive profitable growth through disciplined land acquisition.
Reflecting upon these excellent results and the upbeat strategy update, we believe the recent insider buying by the CEO to be bullish. It suggests that he believes that Crest Nicholson will keep making progress and that the market is currently undervaluing the shares.