Insider Buying

Insider Buying Report: Davide Campari-Milano SpA (CPR:IM)

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Davide Campari-Milano SpA (CPR:IM)

12-month performance: +11%
Insider activity: Bullish
Insider buying pattern: Buying from family holding company
Recent news: Broker upgrade

Insider transactions can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more knowledge of a company, and its prospects, than insiders.

In this report, we are going to highlight an interesting pattern of insider buying at Davide Campari-Milano N.V. (CPR:IM). Davide Campari-Milano is an Italian company that operates in the alcoholic and non-alcoholic beverage industries. Its brands include Campari, Aperol, Wild Turkey, and SKYY Vodka. It is listed on the Borsa Italiana and currently has a market capitalization of €10.8 billion.

Davide Campari-Milano: insider buying

What has caught our attention here is a series of purchases from holding company Lagfin S.C.A in September. Our records show that during the month, the holding company purchased Davide Campari-Milano stock on eight separate occasions. In total, Lagfin purchased approximately 2.9 million CPR shares throughout the month, spending nearly €25 million on stock.

CPR-IM (chart)     Source: 2iQ Research

Majority shareholder

The reason this buying activity is significant is that Lagfin S.C.A is the majority shareholder of Davide Campari-Milano. As majority shareholder, the company is likely to have deep insight in relation to Davide Campari-Milano’s operations.

It’s also worth pointing out that recent purchases from Lagfin have been timed well. In early August, the holding company was buying stock when Davide Campari-Milano’s share price was under €8. Since then, the share price has risen to around €9.30.

Broker upgrade

Davide Campari-Milano’s first-half results were disappointing as the second quarter was impacted by Covid-19. Sales for the first half were down 11.3% to €768.7 million.

However, looking ahead, the company said that the negative impact of the pandemic is expected to lessen with the gradual lifting of the restrictive measures across markets. This suggests that the company’s financial performance could be set to improve. Interestingly, analysts at JP Morgan recently upgraded the stock to ‘overweight’ from ‘underweight’ and increased their price target from €6 to €10.

Putting this all together, we see the insider buying here as bullish. It suggests that insiders see the stock as undervalued right now.

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