If multiple insiders are buying company stock, it can be worth taking a closer look. This buying pattern – which is called ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight some cluster buying at Intertrust NV (INTER:NA). Intertrust is a financial services company that provides trust and corporate services to corporations, funds, financial institutions, and private individuals. Its services include trust formation and implementation, legal administration, accounting and reporting, carbon solutions, capital markets services, fund services, securitization and structured finance services, and treasury management. The company is listed on Euronext Amsterdam and currently has a market capitalization of €1.2 billion.
Intertrust: Insider Buying
Our data shows that in late February and early March, five insiders at Intertrust purchased stock in a cluster buying pattern. Those who bought shares included:
- CFO Rogier Van Wijk (5,000 shares)
- Chief Commercial Officer Ian Lynch (18,047 shares)
- COO Chitra Baskar (5,900 shares)
- Managing Director Americas & ROW Lee David Godfrey (750 shares)
- Managing Director Americas & ROW Daniel Jaffe (3,316 shares)
Combined, the five insiders spent around €460,000 on stock.
This cluster buying pattern indicates that insiders agree that Intertrust stock is undervalued at present. Our Insider Model views this buying pattern as bullish.
It’s worth noting that all five insiders that purchased stock are part of either the management board or the executive committee. This means that they are likely to have deep insight into the company’s operations. This gives the cluster purchase more informational value.
Solid Q4 Results
Intertrust recently posted a solid set of full-year results, considering the economic environment. For the year, reported revenue increased by 3.9% to €564.5 million. However, adjusted EBITA margin declined to 32.8% from 36.4% due to lower revenue in Corporates and Private Wealth which negatively impacted margin mix, and investments in the Centre of Excellence.
For 2020, management proposed not to declare a dividend in order to prioritize the reduction of debt. The group’s goal is to reduce its leverage ratio below 3.4x by the end of 2021. However, it advised that a dividend is to be reinstated for FY2021 at 20% of adjusted net income, alongside a revised capital allocation framework aiming at strengthening the balance sheet, supporting continued growth, and optimizing shareholder returns. Looking to the medium term, Intertrust said that it is targeting 4% to 6% revenue growth.
“I am confident in the long-term strategic direction of the company,” said CEO Shankar Iyer. “Whilst the operating environment remains challenging, our strengths are clear: strong demand for our expertise, many high-quality businesses and a deep understanding of our clients,” he added.
Given the solid results and the confident tone from management, we see the insider buying here as bullish.