There are two main reasons insiders invest in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the company expect the company’s share price to rise.
In this report, we are going to look at some insider buying at FD Technologies PLC (FDP: LN). FD Technologies is a British company that specializes in big-data solutions. Its solutions, which include real-time streaming analytics platform KX, are used across a wide range of industries including financial services, energy, and healthcare. The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £411 million.
FD Technologies PLC: Insider Buying
Our data shows that on January 14, two insiders at FD Technologies bought stock. Those who picked up shares were:
● CEO Seamus Keating (5,700 shares @ £17.35 per share)
● CFO Ryan Preston (1,140 shares @ £17.40 per share)
Combined, these two insiders spent around £119,000 on FDP stock.
This insider activity is worth highlighting for a couple of reasons. Firstly, insider purchases at FD Technologies are not very common. Our data shows that these are the first insider buys since January 2018. This suggests that the insiders see value on offer at present.
Secondly, these insiders are both top-level insiders who are likely to have deep insight into the company’s operations and performance. Mr. Keating, in particular, is likely to have an excellent understanding of the company as he was first appointed to the Board as an Independent Non-Executive Director in December 2012 and was appointed Non-Executive Chairman in July 2013. It’s worth noting that he made a large purchase in early 2016, right before the share price shot up significantly.
FDP Technologies shares have underperformed over the last year on the back of lower earnings.
For the half-year ended August 31, 2021, adjusted diluted earnings per share came in at 11.7p, versus 31.7p a year earlier. Earnings for the period were impacted by strategic investments in the group’s KX platform, which were announced in May 2021.
Management appears to be very confident about the future, however.
“I am very encouraged by the increasing momentum across the business since we announced our accelerated growth strategy in May 2021. The opportunity for KX to deliver continuous intelligence remains enormous, and we are excited by the traction we are achieving across industries,” said Mr. Keating in the company’s H1 results.
“The outlook across our businesses is positive, with each business unit expected to meet or exceed its full-year growth target,” he added.
It’s worth noting that in the six-month period to August 31, the group signed 12 new customers across the financial services, automotive, manufacturing, utilities, and healthcare industries, all of which have “significant expansion potential.” It also landed a total of 41 KX subscriptions deals, up from 14 in the prior-year period.
In light of the confidence from management here, we see this insider buying as a bullish indicator. It suggests that insiders expect the stock to bounce back.