Corporate executives and company directors have the most up-to-date information on their companies' prospects. If these insiders are buying stock, it’s worth taking note.
In this article, we are going to highlight recent insider buying at Elanco Animal Health Inc (ELAN:US). Elanco Animal Health is a US-based company that develops, manufactures, and markets health products for animals. It is listed on the New York Stock Exchange and currently has a market capitalisation of $11.3 billion.
What looks interesting here is the fact that in August, four different insiders have purchased ELAN stock. Those buying have included the Chairman, the CFO, and two board members. Combined, these insiders have spent around $740,000 on stock. The insider transactions are listed below:
- 3 August: CFO Todd Young purchased 7,000 shares @ $23.91 per share
- 6 August: Board Member Art Garcia purchased 2,000 shares @ $24.76 per share
- 19 August: Board Member John Bilbrey purchased 9,580 shares @ 26.20 per share
- 21 August: Chairman David Hoover purchased 10,000 shares @ $26.94
This buying activity stands out to us for several reasons. Firstly, two of these insiders are top-level insiders. Both the Chairman and the CFO are likely to have excellent insight into the company’s operations.
Secondly, all of these transactions are substantial on a relative basis. For example, Hoover’s purchase has increased the size of his holding by 47%. Meanwhile, Young’s purchase has increased the size of his holding by 17%. This suggests that these insiders are confident about the future.
Third, the last time we saw a pattern of cluster buying here, in September last year, the stock rose around 15% over the next three months, outperforming the market.
Elanco’s second-quarter results, issued on 30 July, showed that the company has been affected by the coronavirus pandemic. Revenue for the quarter was down 25%, reflecting lower levels of demand due to Covid-19.
However, the company said that its actions throughout Covid-19 are already yielding results including better competitive positioning and greater financial flexibility. It also advised that its long-term industry fundamentals and durability remain intact.
All things considered, we see the insider transaction activity here as a bullish signal. It suggests that insiders believe the company can recover from recent Covid-19-related challenges.