Insider Buying

Insider Buying Report: Enviva Inc (EVA:US)

Enviva Inc
(EVA:US)
12 months:
+7.84%
Activity:
Bullish
Pattern:
Purchase from CEO, CFO, and Executive Vice President
News:
Trading update
Enviva Inc
(EVA:US)
12 months:
+7.84%
Activity:
Bullish
Pattern:
Purchase from CEO, CFO, and Executive Vice President
News:
Trading update

If multiple insiders are buying company stock within a short period of time, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.

Here, we are going to look at recent cluster buying at Enviva Inc (EVA:US). Enviva is the world’s biggest producer of industrial wood pellets. Its pellets are used as a biomass fuel by power generation and industrial clients in the US and Europe. The company is listed on the New York Stock Exchange and currently has a market capitalization of $3.82 billion.

Enviva Inc: Insider Buying

Our insider transaction data shows on June 23 three insiders at Enviva bought stock. Those who bought shares were:

  • CEO/Chairman John Keppler (16,422 shares @ $60.57 per share)
  • CFO Shai Even (4,300 shares @ $58.85 per share)
  • Executive Vice President Thomas Meth (8,600 shares @ $58.78 per share)

In total, the three insiders spent around $1.75 million on Enviva stock.

Top-Tier Insiders

We feel the recent insider buying at Enviva is significant for a couple of reasons.

Firstly, the cluster buying pattern includes both the CEO and CFO, who are nearly always the two most influential players within a company. Mr. Keppler co-founded Enviva and it is therefore almost certain that he understands the business extremely well. Mr. Even has been CFO for four years and has 25 years of operational and strategic finance experience. He was previously CFO of Alon USA Energy Inc and DCL Group.

Secondly, the three insiders have spent over $1.75 million on EVA stock. This suggests to us that the insiders strongly believe that the shares are undervalued by the market.

Third, our insider transaction data shows that the last cluster buying at the company in the middle of last year was followed by a move up in the share price a few months later.

Full-Year Remains on Track

In its latest trading update, Enviva reassured investors that it expects to produce full-year results that are in line with the company’s previous guidance.

Enviva believes that its Q2 performance will be similar to the numbers produced in Q1 2022. The company is exiting its seasonally softer period, and improvements in performance by logistics providers and reduced disruption from Covid-19 should help the company meet its targets. Current spot prices are at elevated levels in excess of $300 per metric ton, and the company has been able to take advantage of this despite being contracted into some longer-term contracts at lower prices. Increases in fuel costs have been mitigated by reducing the company’s procurement radius of its raw materials.

Looking further out, management was confident in relation to the outlook. “Continued global commitments to the energy transition combined with the current geopolitical backdrop are creating a highly constructive pricing environment for near-term deliveries and long-term contracts at favorable headline pricing levels not previously seen. Given the continuing structural shortage in wood pellet supply that remains in our industry, where long-term demand continues to outstrip supply capacity, there has never been a better time to be in this business and we are excited to be positioned for highly accretive, durable growth,” said Mr. Keppler.

Given this reassuring update, we consider the recent insider purchases at Enviva to be a bullish development.

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