CFO buys can provide us with valuable trading insights. CFOs tend to have a detailed understanding of their firms’ financials and some studies have found that these insiders earn higher profits from their purchases of company shares than CEOs.
In this report, we are going to highlight a CFO purchase at Enel S.p.A. (ENEL:IM). Enel is an Italian power company that has a presence in more than 30 countries. The company’s subsidiaries include Enel Green Power, which supplies energy through wind, solar, geothermal and hydropower plants, and Enel X, which focuses on energy-related products and services including distribution systems and batteries, smart lighting and energy, and electric mobility. The company is listed on the Borsa Italiana and currently has a market capitalization of €71.4 billion.
Enel S.p.A.: Insider Buying
Our data shows that on October 12, Enel CFO Alberto De Paoli purchased 20,000 shares at a price of €6.75 per share. This trade cost the insider €135,000.
Mr. De Paoli has considerable company experience. He joined the Enel Group in 2008 as CFO of Enel Green Power, and shortly after became Head of Group Strategy. He was then appointed group CFO in November 2014. Given his experience, he is likely to have a very good understanding of the group’s financials and prospects. It’s worth noting that he has an excellent trading track record, with a long-term Trading IQ of a high 115.
What stands out about this trade is that it represents the first purchase from an insider since May 2020 and it comes after a period of share price weakness. The timing of the trade suggests that the CFO sees value on offer right now.
Renewable Energy Investments
Enel’s recent Q1 results were quite disappointing,
For the period, revenue amounted to €17,107 million euros versus €19,985 million in the first quarter of 2020 due to lower trading activities. Meanwhile, group net ordinary income fell to €1,214 million from €1,281 million in the Q1 2020.
However, the group confirmed its growth targets for 2021 and advised that it continues to direct capital towards renewable energy projects. It believes this will help accelerate growth going forward.
"In the first quarter of 2021, we significantly increased our investments, mainly in renewables and grids, in order to further accelerate the Group's decarbonization process and seize the opportunities that will emerge from the economic recovery. These investments will allow us to accelerate growth, in a context of ever increasing decarbonization, projecting us towards a new record in renewable capacity construction at year-end,” commented CEO Francesco Starace.
In light of the group confirming its targets for the year, we see the insider buying here as a bullish indicator.