One insider buying pattern that often provides powerful trading signals is cluster buying. This is where multiple insiders are buying company stock within a short space of time.
In this report, we are going to highlight some cluster buying at Fresenius Medical Care AG & CO (FME:GR). Fresenius Medical Care is a leading provider of kidney dialysis products and services that operates more than 4,000 dialysis clinics globally. The stock is listed on Deutsche Börse’s Xetra currently has a market capitalization of €17.1 billion.
Fresenius Medical Care: Insider Buying
Our data shows that in late February, six insiders at Fresenius Medical Care purchased stock. Those who bought shares were:
- Franklin W. Maddux, Global Chief Medical Officer (8,000 ADRs)
- Dr. Katarzyna Mazur-Hofsäß, Chief Executive Officer for EMEA (3,295 shares)
- Dr. Olaf Schermeier, Chief Executive Officer for Global Research and Development (3,730 shares)
- Kent Wanzek, Chief Executive Officer for Global Manufacturing, Quality and Supply (7,639 ADRs)
- Harry de Wit, Chief Executive Officer for Asia-Pacific (2,650 shares)
- Helen Ping Giza, Chief Financial Officer (8,699 ADRs)
Combined, these insiders spent around €1.3 million on Fresenius Medical Care stock.
This cluster buying pattern indicates that there is a clear consensus of opinion that Fresenius Medical Care stock is undervalued right now. Our Insider Model views the trading activity as bullish.
It’s worth noting that all of the insiders involved in the cluster purchase are top-level insiders that are part of the company’s management board. This adds weight to the value of the cluster because they are likely to have a high level of information on the company.
Fresenius Medical Care posted a solid set of full-year results on 23 February. For the year, revenue was up 5% at constant currency, while net income was up 12%. As a result of this performance, the group proposed its 24th consecutive dividend increase.
However, looking ahead, the company said that Covid-19 would continue to impact earnings in the near term. Accelerated Covid-19 infection rates at the end of 2020 resulted in significant excess mortality in the dialysis patient population and this is expected to continue into 2021.
To compensate for the negative earnings effects of the pandemic and support its 2025 strategy the company plans to launch the ‘FME25 program.’ This will focus on the simplification of the company’s operating model to reduce the cost base, and the acceleration of the digitalization agenda.
The cluster buying here suggests that insiders are confident this program will enhance profitability. We see this insider buying pattern as a bullish signal.