When a number of insiders are buying company stock within a short period of time, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
Here, we are going to highlight cluster buying at ECN Capital Corp (ECN:CN). ECN Capital is a Canadian financing company that has managed and advised assets of around $30 billion. It provides credit portfolios to over 75 financial partners in the US and operates through two businesses, Triad Financial Services and The Kessler Group. It’s traded on the Toronto Stock Exchange and currently has a market capitalization of CAD $1.38 billion.
ECN Capital Corp: Insider Buying
Our insider transaction data shows that between January 4 and January 11, five insiders at ECN Capital bought stock. Those who bought shares were:
- CEO Steven Hudson (1 million shares @ CAD $5.43)
- Chief Legal Officer Mary Konig (180,000 shares @ CAD $5.53)
- Vice President Barry James (94,793 shares @ CAD $5.27)
- Senior Vice President Michael McCormack (65,000 shares @ CAD $5.40)
- Director Paul Stoyan (26,000 shares @ CAD $5.37)
In total, the five insiders invested around CAD $7.4 million (approx. USD $6 million) in ECN Capital stock.
Large Insider Transactions
This trading activity is worth highlighting for a few reasons.
Firstly, the combined monetary total of the insider trades is a significant amount of money and suggests that the insiders are extremely confident in the future prospects of the company. The company’s shares have not performed strongly over the prior 12 months and these trades indicate that the insiders believe the share price performance will improve in the future.
It is also noteworthy that CEO Steven Hudson has spent over CAD $5 million on stock. Mr. Hudson has a strong track record and during his five years as CEO of Element Financial Corp he increased their assets from just under $400 million to more than $24 billion, establishing it as North America’s largest independent equipment finance company. These recent share purchases have lifted his stake by over 200% which would suggest he is very confident he can drive growth at ECN Capital.
ECN Capital produced promising results for the third quarter that saw key metrics improve across the business compared to the year prior.
Originations for the three months ending September 30 were $299 million, up from $202 a year before and from $262 million in the prior quarter. Total earning assets managed and advisory totaled $30.1 billion, an increase of just over $1 billion from the quarter ended September 30, 2020. Adjusted EBITDA of $26.8 million during the third quarter was an improvement on the $18.4 million achieved a year before.
“ECN reported excellent results in Q3. $0.06 per share, excluding Service Finance, which is classified as discontinued in the quarter, puts us well on track to meet or exceed our 2021 guidance for Triad and KG. I want to congratulate all of our team members for producing these fantastic results,” said Steven Hudson, CEO of ECN Capital Corp.
Having looked at this strong quarterly update and confident outlook for the group, we see the recent cluster buying at ECN Capital as bullish. It suggests that the CEO and the other insiders believe that the share price will move upwards from current levels.