12-month performance: -38% Insider activity: Bullish Insider buying pattern: Large purchase from CEO Recent news: Encouraging Q2 results
CEOs generally have deep insight into their own companies’ operations. If these insiders are buying stock, investors should take note.
Here, we are going to highlight a large CEO purchase at Guess? Inc (GES:US). Guess? is an American clothing company that has over 700 stores across the world. It’s listed on the New York Stock Exchange and currently has a market capitalization of $719 million.
Guess? Inc: insider buying
Form 4 filings show that on 10 September the CEO of Guess?, Carlos Alberini, purchased 83,000 GES shares at a price of $12.05 per share. This purchase – which cost the insider approximately $1 million – boosted his holding by 35%.
Source: 2iQ Research
High insider IQ
This CEO purchase looks interesting for a couple of reasons. Firstly, Alberini has a good track record when it comes to the timing of his purchase. After he bought Guess? stock in June last year, the stock rose 40% over the next six months. Similarly, when he purchased Guess? stock in July this year, the stock rose around 40% over the next three months.
Secondly, this is a substantial purchase from the insider, which is what we like to see. Our Insider Model views this insider purchase as very bullish.
Guess? Inc shares are currently down about 50% year to date. This is due to the fact that the company has been impacted significantly by Covid-19.
However, second-quarter results, issued in early September, showed signs of a recovery. Not only did Guess? beat revenue expectations but it also posted a smaller-than-expected loss. Meanwhile, the company advised that throughout the quarter it repurchased $39 million worth of shares. It also said that it would be resuming its dividend.
In light of this news, we see the insider buying here as a bullish signal. It suggests that the CEO views the stock as undervalued at the moment.
Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.
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