Insider buying can offer clues in relation to a stock’s future direction. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this article, we are going to highlight some interesting insider buying at Hermès International (RMS:FP). Hermes is a French luxury goods manufacturer that sells leather goods, clothing, scarves, home furnishings, perfume, watches, and jewellery. It is listed on Euronext Paris and currently has a market capitalization of €100 billion.
Hermès: Insider Buying
Our records show that on 18 March, Phillippe Dumas – the grandson of Hermès Founder Emile Dumas – purchased 5,000 shares at a price of €978 per share. This transaction cost the insider €4.9 million.
Large Insider Purchase
This purchase stands out due to its size. Our data shows that it is the second largest insider purchase at Hermès in the last two years. The size of the purchase suggests that Dumas is very confident that the stock is set to keep rising.
Additionally, recent purchases from the Dumas family have been timed very well. Last June, for example, H51 – a family holding company owned by the Dumas family – purchased €18 million worth of Hermès stock when the share price was near €700. Since then, the stock has risen to €950.
Strong Q4 Results
Hermès posted a strong set of fourth-quarter results in February. For the quarter, group sales were up 16%, driven by an excellent performance in Asia (Asia sales were up 47%), a good performance in the company’s leather goods division (18% growth), and a strong increase in online sales.
Analysts at JP Morgan said the Q4 results represented a "very impressive delivery” from Hermès on both the top and bottom line. They added that the performance should be “more than enough” to defy the stock’s premium valuation and give further support to the shares.
In light of these strong Q4 results, we see the insider buying here as bullish.