Insider buying can provide clues in relation to a stock’s future direction. Insiders only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some insider buying at FlatexDEGIRO AG (FTK:GR). FlatexDEGIRO is a European FinTech company that specializes in securities trading and transaction processing. The company operates one of the fastest-growing online brokerage businesses in Europe, executing more than 75 million paperless securities transactions per annum. It is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €2.2 billion.
FlatexDEGIRO: Insider Buying
Our records show that on 5 March, both CEO Frank Niehage and CFO Muhamad Chahrour bought FTK stock. Niehage purchased 2,000 shares at a price of €75.00, spending €150,000 on stock. Meanwhile, Chahrour purchased 1,500 shares at a price of €75.10 per share, spending €112,650 on stock.
This insider trading activity is worth highlighting for a couple of reasons. Firstly, these are top-level insiders that have purchased stock. Both Niehage and Chahrour are likely to have a high level of information on the company.
Secondly, past insider transactions at FlatexDEGIRO have been timed very well. For example, in June and July last year, a number of insiders, including Niehage, purchased FTK stock when it was trading under €40. Since then, it has risen to over €80. It’s worth noting that Niehage has a very high long-term trading IQ of 137 which means that he has an excellent track record when it comes to timing his purchases and sales well.
FlatexDEGIRO recently posted a very strong set of full-year results for 2020 that beat expectations. For the year, revenue rose 98% to €261 million, while adjusted EBITDA rose 200% to €114 million. Operating cash flow more than tripled to €141 million.
At the end of 2020, the company had 1.25 million customers, an organic increase of 56% compared to the 0.80 million brokerage customers it had at the end of 2019. Looking ahead, the company said that it expects the number of customers to increase to between 1.8 million and 2.0 million by the end of the year. Transactions executed are expected to range between 75 million and 90 million in 2021.
“We see a continued tremendous development of customer growth and trading activity. We are on an excellent track with our strategic priorities,” said Mr. Niehage. “The preliminary financials illustrate the company’s enormous ability to monetize customer growth and trading activity on its highly scalable online brokerage platforms,” he added.
In light of these strong results and the confident tone from management, we see the insider buying here as bullish.