Research shows that insiders at small firms tend to earn greater profits from their stock purchases than insiders at large firms. Smaller companies are less researched than larger companies meaning that they are often less efficiently priced.
In this report, we are going to highlight insider buying at a small US company, Information Services Group (III:US). Information Services Group is a global technology research and advisory firm that specializes in digital transformation services. The company operates in 20 countries, serving both private and public sector organizations. It is listed on the NASDAQ Global Market and currently has a market capitalization of $395 million.
Information Services Group: Insider Buying
Our data shows that on December 8, Todd Lavieri, Vice Chairman and President, ISG Americas and Asia Pacific, bought 75,000 III shares at a price of $8.03 per share. This trade cost the insider $602,250 and increased his holding to 857,010 shares.
This trade is worth highlighting for a couple of reasons.
Firstly, Mr. Lavieri has made a large purchase. Our records show that his trade represents the largest insider purchase at ISG for several years. This suggests he is confident the stock is set to move higher. It’s worth noting that this trade comes shortly after CFO Humberto Alfonso spent approximately $100,000 on stock in November. Our Insider Model views the buying activity as bullish.
Secondly, Mr. Lavieri – who joined the company in 2014 – has extensive experience in the IT industry. Previously, he was at IBM, where he served as General Manager of IBM Global Consulting. This means he is likely to have an excellent understanding of his company’s prospects.
Information Services Group’s recent third-quarter results showed that the company has a lot of momentum right now.
For the period, the group generated record revenue of $71 million, up 15% from the prior year, exceeding guidance. Meanwhile, operating income came in at $7.3 million, more than double the operating income of $3.0 million in the third quarter of 2020. Net income margin doubled to 6%, from 3% a year earlier.
“ISG delivered another outstanding financial performance in Q3, building on the firm’s momentum in the first half,” commented Michael P. Connors, Chairman and CEO. “Our ISG NEXT operating model continues to resonate in this robust demand environment—driving greater account expansion opportunities and increasing profitability, margins and operating cash flow,” he added.
Looking ahead, Mr. Connors said the market momentum is likely to continue into 2022. ”Enterprises of all types are accelerating their technology investments coming out of the pandemic. We are seeing a strong shift to cloud-based platforms and all things digital as our clients address the requirements of remote working, engaging with customers, improving resiliency and enhancing the quality of business overall,” he said.
In light of this update, we see the insider buying here as a bullish indicator.