Top insiders are able to influence the decision-making process within a company. They also have access to real-time data that allows them to build a picture of how the business is performing. If they are buying stock, it’s because they believe the company’s share price is too low.
Here, we are going to highlight insider buying at Dow Inc (DOW:US). Dow is one of the largest chemical producers in the world. Headquartered in the US, it manufactures and supplies chemicals, plastics, synthetic fibers, and agricultural products globally. It’s traded on the New York Stock Exchange and currently has a market capitalization of $43 billion.
Dow Inc: Insider Buying
Our data shows that on October 29, the CEO at Dow, James Fitterling, bought 5,000 DOW shares at a price of $56.03 per share. This purchase cost the insider around $280,000.
On the same day, a director at Dow, Richard Davis, made a smaller purchase, picking up 1,200 DOW shares at a price of 56.26 per share. This trade cost Davis around $70,000 and increased his holding by just over 5%.
Good Track Record
Mr. Fitterling has been at Dow for nearly 40 years and has significant experience within its subsidiaries. He has held senior positions for over 20 years, having been made CEO of Filmtec Corporation – a subsidiary of Dow – in 1998. In 2015, Mr. Fitterling was appointed COO at Dow and then in 2016, he was also made President. In March 2018, he was appointed CEO. This background means he is likely to know the company very well.
It’s worth noting that Mr. Fitterling has demonstrated an ability to pick his trading levels well in the past. Indeed, our data shows that he picked up 20,000 DOW shares back in March 2020 at a price over 50% below current levels.
Robust End-Market Demand
Dow had a strong Q3 with sales growing strongly and pricing improving.
Sales for the three months ending September 30 were $14.8 billion, which was up 53% on Q3 2020. As well as experiencing a big bounce back in sales compared to the prior year, the company also grew sales 7% versus Q2, seeing gains in all segments and regions. Local price was up 50% versus a year prior and up 5% on Q2.
For the period, equity earnings came in at $249 million which was up from $189 million in the same period last year. Operating EBIT of $2.9 billion was over $2.1 billion higher than Q3 2020. Reassuringly, gross debt fell by more than $1.1 billion in the quarter and the company returned $918 million to shareholders during the period.
“We continue to see robust end-market demand that is expected to extend into 2022, coupled with near-term logistics constraints and low inventory levels across our value chains. Looking ahead, Dow is well positioned to increase earnings, cash flow and returns as we decarbonize our footprint and achieve our 2030 and 2050 carbon emissions reduction targets. Dow expects to deliver significant long-term value for shareholders as we continue to apply our balanced capital allocation approach to grow earnings while maintaining our strong operational and financial discipline,” said Mr. Fitterling.
Given these impressive results and confident CEO outlook statement, we see the recent insider buying at the company as bullish. Mr. Fitterling continues to see earnings growth at Dow and his recent purchase of company stock suggests that he feels the shares will continue to move higher.