High-level corporate executives tend to have an information advantage over other investors. If these investors are buying company stock, it’s generally a bullish development.
Here, we are going to highlight a purchase by the CEO at Hill & Smith Holdings PLC (HILS:LN). Hill & Smith designs, manufactures, and supplies infrastructure products; and provides galvanizing services. It operates through three segments: Infrastructure Products- Utilities; Infrastructure Products- Road; and Galvanizing Services. It’s listed on the London Stock Exchange and currently has a market capitalization of £1.18 billion.
Hill & Smith Holdings PLC: Insider Buying
Regulatory filings show that on 7 April the CEO of Hill & Smith, Paul Simmons, purchased 4,999 HILS shares at a price of £15.04 per share. This purchase cost the insider approximately £75,000.
Insider Buying Trend
Whilst Simmons has only recently joined the company, he has a great deal of experience within the industry. He worked at Halma PLC for 10 years and was Chief Executive of The Infrastructure Safety and Process Safety sectors. He also spent 13 years at 3M leading businesses in the UK and the USA. This means he is likely to have a good read on the industry and his firm’s prospects.
It's worth noting that our data shows that there has been a bullish pattern of insider trading here since the third quarter of 2020. The Chairman, CFO and Directors have all bought stock which suggests there is positive sentiment towards the stock at the top of the company.
Positive Long-Term Prospects
2020 was a challenging year for Hill & Smith due to the Covid-19 pandemic but there was a marked improvement in trading in the second half of the year. As a result of this improvement, the full-year results were ahead of guidance. The businesses in the US performed particularly strongly and their financial performance was relatively unchanged on the prior year. Whilst profit before tax for the year was down 43% at £35.5 million, prudent cash management and cost cutting meant that net debt was reduced by £69.1 million to £146.2 million. The dividend was able to be increased to 26.7p for the full year from 10.6p the year before.
"The robust 2020 trading performance clearly demonstrates the strengths of the Group's business model. We are particularly pleased with the strong recovery in the second half of 2020, with trading approaching prior year levels. This provides a solid platform to build from as we enhance our organic growth plans and realign our portfolio to drive even better returns. Our organic and acquisitive growth plans are underpinned by a strong balance sheet as well as positive dynamics in our key end markets given the long-term requirement to upgrade infrastructure in a sustainable way. We expect to see a good recovery in trading in 2021," said CEO Paul Simmons.
On the back of the recent improvement in trading at Hill & Smith and the positive outlook for the business, we see the insider trading here as bullish. It suggests the CEO is confident in his company’s prospects and believes the shares will continue to move upwards.