When it comes to insider trades, CFO purchases shouldn’t be ignored. CFOs have considerable insights into their firms’ financial health and some studies have found that these insiders earn higher abnormal returns following their purchases of company shares than CEOs.
In this report, we are going to highlight some recent CFO purchases at Hugo Boss AG (BOSS:GR). Hugo Boss is a German designer clothing company that sells its products under the BOSS and HUGO brands worldwide. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €1.9 billion.
Hugo Boss: insider buying
Our records show that in the last month, Hugo Boss’ CFO Yves Marc Mueller has purchased BOSS stock twice. On 16/11, he purchased 2,000 at €25.00 per share. Then, on 2/12, he bought another 2,800 shares at a price of €25.87 per share. In total, the insider spent around €122,000 on stock.
This insider activity is significant for a number of reasons. Firstly, these two purchases have lifted Mueller’s holding from 6,000 shares to 10,800 shares – an 80% increase. This indicates that the insider is very confident that the stock is undervalued at present.
Secondly, Mueller’s last purchase was timed well. The last time he bought shares was on 30 September when BOSS stock was trading at €21. Since then, it has risen by more than 30%.
A return to profit
Hugo Boss has been impacted significantly by the coronavirus. H1 sales, for example, were down 38%. However, the retailer now appears to be recovering. In the third quarter, EBIT returned to positive territory (€15 million) while free cash flow came in at €155 million. Encouragingly, revenues in China were up 27% for the period, while online sales were up 66%, boosted by the expansion of hugoboss.com to 24 new markets.
Looking ahead, the company said that, based on its overall position of financial strength, it will continue to focus on driving the further recovery of its business going forward with the aim of returning to its former growth trajectory.
In light of this improvement in business performance, we see the insider buying here as bullish. It suggests that the CFO expects the stock to keep rising.