‘Cluster buying’ is a particularly strong insider buying signal. This is where multiple insiders are purchasing company stock within a short space of time.
In this report, we are going to highlight some cluster buying at ENGIE SA (ENGI:FP). ENGIE is a French renewable energy company. The group is focused on four core activities: renewable energy, energy solutions, networks, and thermal production & energy supply. It is listed on the Euronext Paris stock exchange and currently has a market capitalization of €28.9 billion.
ENGIE: Insider Buying
Our data shows that between 2 August and 4 August, four insiders at ENGIE bought stock. Those who purchased shares were:
- Catherine MacGregor, CEO (15,000 shares)
- Jean-Pierre Clamadieu, Chairman (10,000 shares)
- Franck Demaille, Executive Vice President, in charge of Transformation and Geographies (2,500 shares)
- Claire Waysand, Executive Vice President, in charge of Corporate Secretariat, Strategy, Research & Innovation and Communication (5,000 shares)
In total, these insiders spent around €370,000 on stock.
Bullish Cluster Buy
There are a number of things that stand out about this particular cluster purchase. Firstly, it involves purchases from a number of top-level insiders. The CEO, the Chairman, and the two members of the Executive Committee are all top-level insiders who are likely to have a superior level of information on the group and its prospects.
Secondly, the purchases have increased the size of each insider’s holding significantly. MacGregor’s purchase, for example, has increased the size of her holding by 100%. Meanwhile, Clamadieu’s purchase has increased the size of his holding by 25%. This suggests that these insiders are confident that the stock is set to move higher.
2021 Guidance Raised
ENGIE recently posted a strong set of H1 results. For the first half of the year, revenue amounted to €31.3 billion, up from €27.4 billion in H1 2020, while EBIT came in at €3.1 billion, versus €2.2 billion in the same period last year. Cash flow from operations totaled €4.3 billion, up 43% year on year.
On the back of these results, the group upgraded its full-year 2021 guidance. It now expects net recurring income group share in the range of €2.5 billion to €2.7 billion. Previous guidance was a range of €2.3 billion to €2.5 billion.
Catherine MacGregor, CEO, commented: “Underpinned by a robust operational performance and significant Covid recovery, ENGIE has delivered very strong growth in profitability in the first half. For the full year, taking into account the strong performance in H1 and improved expectations for the full year, we are upgrading our guidance for 2021.”
Since these results, analysts at CFRA have upgraded the stock from ‘hold’ to ‘buy’ while analysts at JP Morgan have lifted their price target from €17.00 to €17.50. This new price target is nearly 50% above the current share price.
In light of these developments, we view the insider buying here as a bullish indicator.