If a CEO is spending a significant amount of money on company stock, investors should take note. CEOs tend to be well ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
Here, we are going to highlight a purchase of company stock by the CEO at Elmos Semiconductor SE (ELG:GR). Elmos Semiconductor develops, manufactures, and markets semiconductors and sensors. Its biggest market is the automotive industry, but its micromechanics segment also serves the industrial, consumer goods and medical industries. It’s listed on Deutsche Börse’s Xetra and currently has a market capitalization of €1.07 billion.
Elmos Semiconductor SE: Insider Buying
Our insider transaction data shows that on December 14, Dr. Arne Schneider, the CEO of Elmos Semiconductor, purchased 8,000 ELG shares at a price of €45.99 per share. This transaction cost the insider around €370,000 and increased his holding by about 14%.
First Insider Purchase in Over a Year
This insider buying is worth highlighting for a few reasons.
Firstly, this is the first insider purchase here all year. What’s interesting is that Dr. Schneider has chosen to purchase stock after the company’s shares have had a very strong run. This suggests he believes the market is not pricing in the future growth potential here.
Secondly, the insider has spent a substantial amount of money on stock and upped his holding by a sizeable percentage. This indicates he is very confident the stock is set to move higher.
Record Group Sales
Elmos’ recent third quarter results showed that the company has strong momentum right now.
For the quarter, sales came in at a record €80.8 million, almost double the sales figure in Q3 2020. Meanwhile, the Q3 EBIT figure of €13.6 million was well up on the prior year and was slightly ahead of the €12.5 million produced in the second quarter of this year. This was achieved despite the company seeing a rise in material prices. The third quarter EBIT margin of 16.8% was above the midpoint of the quarterly guidance while adjusted free cash flow figure was positive at €2.7 million.
“We were able to continue our solid business development in the third quarter and performed well in an ongoing challenging market environment. Record sales of 80.8 million Euro and an EBIT margin of 16.8% are both encouraging figures,” said Dr. Arne Schneider.
Having digested the Q3 results, we see the recent insider buying is bullish. The large purchase from the CEO suggests that he expects the stock to move up from here.