If multiple insiders at the same organization have purchased company stock within a short period of time, investors should take note. This buying pattern – which is called ‘cluster buying’ – can be a strong indication that the stock is undervalued.
In this report, we are going to highlight some recent cluster buying at Exlservice Holdings Inc (EXLS:US). Exlservice is a global analytics and digital solutions company that partners with businesses to improve processes and unlock growth. Bringing together deep domain expertise with robust data, powerful analytics, cloud, and AI, it creates agile, scalable solutions for the world’s leading corporations. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $4.69 billion.
Exlservice Holdings Inc: Insider Buying
Our insider transaction shows that between March 11 and March 16, four insiders at Exlservice picked up shares. Those that bought stock were:
- Business Head, Emerging Narasimha Kini (1,000 shares @ $124.75 per share)
- CFO Maurizio Nicolelli (1,200 shares @ $124.50 per share)
- Chief Growth & Strategy Officer Anita Mahon (1,150 shares @ $138.05 per share)
- General Counsel and Corporate Secretary Ajay Ayyappan (1,263 shares @ $136.04 per share)
Combined, the insiders spent around $600,000 on stock.
Bullish Cluster Buying Pattern
This cluster buying pattern is worth highlighting for a couple of reasons.
Firstly, all four insiders are members of the company’s Executive Team. This means that they are likely to have an excellent understanding of the firm’s operations and prospects.
Secondly, three of the four insiders have increased the size of their holdings significantly with their purchases. CFO Maurizio Nicolelli, for example, has increased the size of his holding by 19%. This suggests the insiders are very confident that the stock is set to move higher.
Good Q4 Results and Updated Guidance
Exlservice recently posted a solid set of results for Q4 2021.
For the period, revenue amounted to $295.5 million, up 18.7% year over year. Meanwhile, Non-GAAP adjusted diluted EPS came in at $1.21, up from $1.14 in Q4 of 2020.
This resulted in revenue for the year of $1.12 billion, up 17.1% year over year, and adjusted diluted EPS for the year of $4.83, up from $3.53 in 2020.
“This was a pivotal year for us, not just from a revenue growth perspective, but also in terms of the evolution of our business into a data analytics and digital operations and solutions company,” commented CEO Rohit Kapoor.
On the back of these results, the group updated its medium-term guidance. It now expects annual organic constant currency revenue growth of 11% to 13% – an increase of approximately 200 basis points from the midpoint of its previous target of 10% or more.
“As we enter fiscal 2022, we see a strong pipeline across our business lines,” said Mr. Kapoor.
In light of these results, and the upgraded guidance, we see the insider buying here as a bullish indicator.