Research on legal insider trading shows that insiders at small firms tend to earn greater profits from their stock purchases than insiders at large firms. The reason that insiders at small companies have more trading success is that smaller companies are generally less researched than larger companies. As a result, they are often not priced by the market correctly.
In this report, we are going to highlight some insider buying at a small German company, EQS AG (EQS:GR). EQS is a leading provider of regulatory technology (RegTech) that offers compliance solutions and investor relation solutions. Its cloud-based products enable customers to digitally manage their compliance workflows whether they relate to policy management, insider list management, or disclosure obligations. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €339 million.
EQS Group: Insider Buying
Our insider transaction data shows that in June, EQS Co-Founder and board member Rony Vogel purchased stock on six occasions at prices between €34.12 and €37.60. In total, the insider purchased 7,125 shares, spending just over €250,000 on stock.
This trading activity from Mr. Vogel stands out due to the size of the purchases. The fact that the insider has spent over a quarter of a million euros on EQS stock suggests that he is very confident the stock is set to move higher going forward.
It’s worth noting that Mr. Vogel has been an active investor and entrepreneur in the software and technology sector for over 20 years now. To date, he has made financial and entrepreneurial commitments to over 20 companies, including Mynaric AG, RTT AG, Solutiance AG, Deskcenter AG, and BlueID GmbH. He participated in the foundation of EQS Group back in 2000 so he is likely to know the company well.
Strong Start to 2021
In mid-May, EQS advised that it had made an ‘excellent start’ to 2021. In the first quarter, the group generated revenue of €10.55 million, up 26% year on year. Meanwhile, the company added 158 new SaaS customers over the period, taking its total SaaS customers to 3,260.
“Our Group has started the new financial year very strongly. We were able to acquire more than 150 new SaaS customers and thus increased our SaaS customers to more than 3,200, together with the latest acquisitions of Got Ethics S/A and C2S2 GmbH. The integration of Got Ethics has already been completed successfully. We are very confident that we will be able to achieve a high market penetration with the establishment of whistleblower systems in Europe,” commented Founder and CEO Achim Weick.
Looking ahead, EQS said that it expects further growth in 2021. For the year, it expects to generate revenue of between €45 million and €49 million, which would represent growth of 20% to 30% year on year. However, it also said that it expects higher marketing and sales expenditure related to the implementation of the EU Whistleblower Directive.
These results show that EQS has momentum at present. In light of the results and the outlook, we see the insider buying here as a bullish indicator.