One of the most bullish signals in insider transaction analysis is a pattern known as ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
In this report, we are going to highlight cluster buying activity at Fingerprint Cards AB (FINGB:SS). Fingerprint Cards is a Swedish company that develops, produces, and markets biometric systems and technologies. Its biometric systems include sensors, algorithms, software, and packaging technologies. The company is listed on the Nasdaq Stockholm stock exchange and currently has a market capitalization of SEK 10.2 billion.
Fingerprint Cards AB: Insider Buying
Our insider transaction data shows that between 7 June and 9 June, four insiders at Fingerprint Cards purchased stock in a cluster buying pattern. Those who purchased stock were:
- President and CEO Christian Fredrikson (42,644 shares @ SEK 31.49 per share)
- CFO Per Sundqvist (3,000 shares @ SEK 32.89 per share)
- Board member Juan Vallejo (170,000 shares @ SEK 29.17 per share)
- Board member Sofia Bertling (5,200 shares @ SEK 29.00 per share)
Combined, these insiders spent around SEK 6.5 million (approx. USD $800,000) on the stock.
Bullish Cluster Purchase
This cluster purchase stands out for a couple of reasons. Firstly, two of the insiders who have purchased stock, Fredrikson and Sundqvist, are top-level executives. These insiders – who both have significant company and industry experience – are likely to have a superior level of information in relation to the company’s operating activities.
Secondly, all four of these insiders have made well-timed purchases recently. In February, for example, both Fredrikson and Sundqvist purchased stock when the share price was under SEK 20. Since then, the stock has risen to SEK 33.
Fingerprint Cards’ share price has pulled back recently after the company advised on 3 June that second-quarter revenues are expected to be partially delayed due to Covid-19 disruption. Fingerprint said that an outbreak in the Vietnamese province of Bac Giang had led authorities to temporarily shut down an industrial complex in which one of its suppliers has production facilities.
While this is clearly a setback, Fingerprint – which saw sales growth of 32% in Q1 – said that a gradual restart of the production facilities is planned for June. It also said that it has secured increased capacity with other suppliers during the third quarter of 2021 and that it should be able to make up the lost Q2 sales in the following quarters.
The buying from insiders here suggests that they are confident that the Covid-19 disruption is a short-term setback. We see this buying activity as a bullish signal.