Top-level corporate insiders such as CEOs and CFOs tend to have the most up-to-date information on their companies. If these insiders are buying stock, it signals that they’re confident about the future and that they expect the stock to rise.
In this report, we are going to flag a large CEO purchase at ISS A/S (ISS:DC). ISS is a leading facility management company that offers a range of services to businesses including cleaning, catering, and security. It is listed on the OMX Nordic Exchange - Copenhagen and currently has a market capitalization of DKK 20.3 billion.
ISS: insider buying
Our records show that on 16 December, ISS’s CEO Jacob Aarup-Andersen purchased 34,000 shares at a price of DKK 115.90 per share. This transaction – which cost the insider DKK 3.9 million (approx $644,000) – increased his holding from 100,000 shares to 134,000 shares.
Largest insider purchase in two years
This insider purchase stands out for two reasons. Firstly, it is a substantial purchase. Not only is it the largest insider purchase at ISS for over two years but it has also increased the size of Aarup-Andersen’s holding by 34%. This indicates that he strongly believes the stock is undervalued at present.
Secondly, Aarup-Andersen has a background in finance and investment management. Previously, he was Group CFO at Danske Bank and Chief Portfolio Manager at Danske Capital. Given his background, he is likely to have a good understanding of the intrinsic value of the stock.
In mid-December, ISS announced a new business strategy. This new strategy, entitled ‘OneISS’, will involve sharpening its strategic focus on key segments, accelerating technology investments, and introducing a new globally-aligned operating model to drive superior value for all stakeholders. The company – whose goal is to become the most respected global leader in integrated facility services – believes that the refreshed strategy and enhanced operating model will create a platform for robust long-term performance with strong growth and consistent cash generation.
“Recently, our execution and financial performance has not been where it needs to be. The strategy we launch today – OneISS – creates a stronger, simpler, closer ISS. It represents the start of a new journey, refocused and relentless in driving execution and delivering on the promise of the company’s global strengths. It is a strategy that will help us achieve our purpose – connecting people and places to make the world work better,” said Mr. Aarup-Andersen.
In light of this new strategy, we see the insider buying from the CEO here as bullish. It suggests that he believes it will lead to a higher stock price.