Insider buying can provide valuable clues about a stock’s potential. Insiders may sell their company stock for numerous reasons. But they only buy stock for one reason – they expect it to go up.
Here, we are going to highlight some insider buying activity at Fingerprint Cards AB (FINGB:SS). Fingerprint Cards develops, produces, and markets biometric systems and technologies. Its biometric systems include sensors, algorithms, software, and packaging technologies. It’s listed on the Nasdaq Stockholm Stock Exchange and currently has a market capitalization of SEK 8.29 billion.
Fingerprint Cards AB: Insider Buying
Regulatory filings show that on 16 February the President/CEO of Fingerprint Cards, Christian Fredrikson, purchased 85,000 FINGB shares at a price of SEK 17.59 per share. This purchase – which cost Fredrikson approximately SEK 1.5 million – increased his holding by around 14%. Then, on 17 February, CFO Per Sundqvist bought 8,500 FINGB shares at a price of SEK 18.87 per share. This purchase doubled Sundqvist’s holding in the company.
Significant Increase In holding
This insider trading activity stands out because it is the first time that multiple insiders at Fingerprint Cards have purchased stock within the space of a few days since March 2020. This simultaneous buying suggests that there is a lot of confidence in the company’s future prospects.
It’s worth noting that both of these insiders have significant top-level corporate experience. Fredrikson has been CEO at the company since 2016 and was previously CEO at F-Secure for four years. Prior to this he was at Nokia for 18 years where he held a number of senior positions. Meanwhile, Sundqvist has been CFO for over two years and was previously CFO of Driconeq. He has experience within the private equity sector and has held the role of CFO at a number of other internationally recognized companies. The fact that he doubled his holding suggests that he is bullish on the company’s future prospects.
Double Upgrade From UBS
Fingerprint Cards delivered mixed Q4 results but there was cause for optimism in the underlying numbers. Encouragingly, revenue increased 7% year on year in constant currency terms and was up 26% on Q3. Gross margin improved to 24%, up from 23% in Q4 2019. Underlying profit adjusted for write-downs was positive at SEK 14 million and liquidity was good at the end of the quarter, with a net cash balance of SEK 354 million.
Whilst supply issues linked to Covid-19 remain, the company has said it is making progress in securing new suppliers to ensure demand is met. The company stated it has “a very positive view of the trend in the market for biometric solutions” and that “2021 has potential to be the year when biometrics make serious inroads in at least two mass markets.”
On the back of these results, UBS upgraded the stock to "buy" from "sell", and hiked its price target by 237% to SEK 33, citing growth potential for the payment sensor market.
In light of these developments, we see the insider buying here as bullish. It indicates that the insiders believe that there are further increases in the share price to come.