A top insider has a deep knowledge of their business and understands what factors will drive their company’s share price higher. If these insiders buy company stock then it sends a positive signal to outside investors and is something they should take note of.
Here, we are going to highlight some interesting insider purchases at FMC Corp (FMC:US). FMC is an American agriculture sciences company that produces chemicals to help protect crops as well as the technology that allows the chemicals to be sprayed onto the land. The company has a presence globally, employing over 7,000 people and invests in R&D to ensure that it is constantly coming up with innovative solutions for its clients. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $15.81 billion.
FMC Corp: Insider Buying
Our insider transaction data shows a number of large insider buys here recently.
On 24 August, President/COO Mark Douglas bought 1,100 FMC shares at a price of $90.57 per share. This cost the insider approximately $100,000.
Then, on 30 August, a Director at FMC, Carol Davidson, purchased 1,500 FMC shares at a price of $93.89 per share. This cost her around $150,000 and increased her holding by around 50%.
Finally, on 3 September, the CFO, Andrew Sandifer, purchased 1,260 FMC shares at a price of $96.97. This purchase set the insider back around $125,000.
Multiple Insiders Buying Stock
This buying activity stands out as it represents the first insider buying at the company for over two years. The fact that insiders are suddenly buying the stock now suggests that there is a change in sentiment at the top of the company.
Additionally, when more than one insider buys stock around the same timeframe, the positive signal sent out to investors is strengthened. This signal is further boosted given that two of the insiders that have picked up stock are the COO and the CFO – two of the most powerful people at the company.
Solid Q2 Numbers
FMC produced results for their second quarter of 2021 that met the market’s expectations.
The group accrued revenue of $1.2 billion in the second quarter which was 8% up on Q2 2020, and 4% of the growth was organic. Adjusted EBITDA of $347 million was up 2%. The company was able to spend $25 million repurchasing shares.
Guidance for full-year revenue was maintained at around $5 billion whilst the range for EBITDA was lowered slightly to $1.29-$1.35 billion which is still 6% higher than full-year 2020 at the midpoint. The company expects to have repurchased up to $450 million of company shares by the year end.
“We are experiencing significant headwinds from escalating costs of raw materials, freight, packaging as well as lingering impacts from supply chain disruptions, which we expect to continue throughout the remainder of the year. However, strong volume growth driven by new products and solid market fundamentals will allow us to continue growing revenue and earnings well ahead of last year and the market in 2021,” said Mark Douglas, the COO of FMC.
These robust results and indications of continued strong demand for FMC’s products lead us to conclude that the recent insider buying is positive. Despite cost pressures on the business, the three insiders have indicated that they believe the shares are undervalued by the market at present.