Large insider buys tend to be worth a closer look. This is because smaller companies are less researched than larger firms, and are often mispriced by the market.
In this report, we are going to highlight some interesting insider buying activity at a small European company, Einhell Germany AG (EIN3:GR). Einhell is a manufacturer of manually-operated, petrol-operated, and electronic tools, electrical tool accessories, metal and plastic gardening and leisure products, and air-conditioning and heating products. Headquartered in Germany, it has operations in over 40 countries worldwide. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of $676 million.
Einhell Germany: Insider Buying
Our data shows that in the second half of February, Einhell’s Chairman of the Executive Board Andreas Kroiss purchased stock on four occasions. In total, the insider picked up 9,000 preferred shares, spending around $2 million on stock.
He later continued this streak with three trades on March 4, 2022. These summed up to a total of 4,000 shares, worth around $771K.
This trading activity is worth highlighting due to the fact Mr. Kroiss has made several well-timed trades over the last few years. In May 2021, for example, he was snapping up shares when the stock was trading below €150. Meanwhile, in September 2020, he was buying when the stock was under €80. Since these purchases, the stock has risen as high as €227.
It’s worth noting that Mr. Kroiss has considerable company experience. He has been Chairman of the Executive Board since 2003 and before this was CEO of the company’s Austrian subsidiary. This experience means he is likely to know the company very well.
A trading update from Einhell in January showed that the group has strong momentum at present.
For 2021, the company generated record turnover of around €920 million, versus €725 million a year earlier.
Meanwhile, it advised that for 2022, it expects revenue growth of between 5% and 10%. It added that the forecast pretax yield amounts to about 8.5%.
Einhell did note that in 2022, there could be challenges in the procurement of goods. However, it also said that it had ordered the product quantities necessary much earlier and increased stock in all sales regions significantly in an effort to ensure high availability of goods.
“The Einhell Group is very confident and optimistic to face the economic challenges,” wrote the board of directors in the trading update.
In light of this confidence from the board, we see the insider buying here as a bullish indicator.