One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
Here, we are going to highlight cluster buying at E.ON SE (EOAN:GR). E.ON is an electric utility service provider. As well as generating and distributing electricity, the company is also involved in natural gas exploration, production, transportation and distribution. It operates in over 30 countries and serves over 33 million customers. It’s listed on the Frankfurt Stock Exchange and currently has a market capitalization of €32 billion.
E.ON SE: Insider Buying
Our insider transaction data shows that between January 7 and January 13, four insiders at E. ON SE bought stock. Those who bought shares were:
- CEO Leonhard Bimbaum (24,959 shares @ €11.88)
- COO Patrick Lammers (16,719 shares @ €11.85)
- Executive Board member Victoria Ossadnik (8,400 shares @ €12.03)
- Supervisory Board member Andreas Schmitz (8,525 shares @ €11.75)
In total, the four insiders spent around €700,000 (approx. USD $800,000) on E.ON SE stock.
Large CEO Transaction
This insider buying is interesting for a number of reasons.
Firstly, as well as four insiders buying in a cluster, it is significant that the CEO has spent around €300,000 on stock. The CEO has been on the Board of Management for eight years now and is therefore likely to know the company extremely well. Our Insider Model views the cluster buying positively.
Secondly, our data shows that two of the four insiders bought stock in March and May last year at levels substantially lower than where the stock is now trading. So, they have timed their purchases well in the past.
Solid Q3 Update
Having raised guidance in August, E. ON affirmed that the company was on track to hit its new targets when releasing its figures for the nine months to September 30.
Sales at the company for the first three quarters rose by €4.8 billion year on year to €48.1 billion. The adjusted EBIT for the period was up €700 million from the year prior, rising to €3.1 billion. The improved performance was in part due to cooler weather. The Customer Solutions’ business also saw an improved operating performance throughout nearly all its markets which saw adjusted EBIT increase markedly by €515 million, compared to the year prior. Debt was reduced by €3.5 billion and stood at around €37.2 billion at the end of September.
“At the half-year mark E.ON increased its outlook for the 2021 financial year. The Essen-based group continues to expect to achieve adjusted EBIT of €4.4 to €4.6 billion and adjusted net income of €2.2 to €2.4 billion for full-year 2021,” said the company, when giving its outlook for the rest of the financial year.
Having digested these results, we see the recent cluster buying at E. ON as bullish. The recent insider trading suggests that many top insiders are bullish that the momentum within the group will continue and that the share price of E. ON will continue to rise.