If a CEO is spending millions on company stock, it’s often worth investigating the security further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to knowledge in relation to growth prospects.
In this report, we are going to highlight a large CEO purchase at Delivery Hero AG (DHER:GR). Delivery Hero operates the largest global food delivery network (outside of China). Founded in 2011, it currently operates in over 50 countries. The company is listed on Deutsche Börse’s Xetra and has a market capitalization of €10.9 billion at present.
Delivery Hero: Insider Buying
Our data shows that on February 10, CEO Niklas Östberg bought 296,000 shares at a price of €47.20 per share. This trade cost the insider approximately €13.97 million and increased the size of his holding to 2.25 million shares.
It’s worth noting that on the same day, Chairman of the Supervisory Board Martin Enderle made a smaller purchase, picking up 2,000 shares at a price of €47.14 per share.
This is not the first time that Mr. Östberg has bought a large amount of Delivery Hero stock. Last October, we highlighted the fact that the insider had spent around €9 million on stock over two transactions. We also highlighted a €5 million purchase from the insider in March of 2021.
What’s interesting though, is that this recent purchase of stock is his largest by a wide margin. Up to now, his largest individual purchase was worth €5 million. This recent buy, however, is worth nearly three times that. This suggests that Mr. Östberg sees a lot of value in the stock at present.
Clearly, he’s not the only one who sees value right now. The fact that the Chairman has also bought stock indicates that insiders agree that the stock is undervalued at the moment.
Share Price Fall
Shares in Delivery Hero recently took a big hit after the company posted its Q4 2021 results.
While Delivery Hero generated solid growth in Q4, with gross merchandise value (GMV) rising 39% year on year, investors were unimpressed with the 2022 guidance the group provided. For the year, the company expects to generate an adjusted EBITDA/GMV margin of around -1.0% to -1.2%. Analysts, however, were expecting EBITDA/GMV of -0.9%.
After the recent share price fall, the stock is now back near levels it was trading at in 2019, before Covid-19. That's despite the fact that the pandemic has dramatically changed consumer behaviors, and significantly increased the popularity of food delivery services.
The large buy from the CEO here suggests that he remains confident about the future and expects the stock to bounce back as the business continues to grow. We see this insider buying as a bullish indicator.