Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.
Here, we are going to highlight insider buying at Jackson Financial Inc (JXN:US). Jackson Financial is a financial services company that offers a range of annuities to retail investors in the USA as well as fixed income products to institutions. It’s listed on the New York Stock Exchange and currently has a market capitalization of $3.5 billion.
Jackson Financial Inc: Insider Buying
2iQ’s insider transaction data shows that on December 14, a director at Jackson Financial, Derek Kirkland, purchased 6,500 JXN shares at a price of $38.14. This transaction cost the insider around $250,000 and increased his holding by just over 50%.
In our view, this insider trade is interesting for two reasons.
Firstly, Mr. Kirkland is an investment professional, so he is likely to have a good understanding of the intrinsic value here. Previously, he was Managing Director and Co-Head of the Global Financial Institutions Group at Morgan Stanley’s Financial Institutions Group in Investment Banking, where he advised many notable companies on M&A and capital raising.
Secondly, the director has upped his holding by more than 50% which gives the impression that he is confident that the shares are currently undervalued. It’s worth noting that prior to Mr. Kirkland buying stock, the Vice Chairman spent over $2.5 million on JXN shares back in early November, which suggests there is positive insider sentiment within the business.
Strong Financial Position
Jackson Financial’s recent third quarter results were solid.
The company reported a net income figure for Q3 of $206 million which was up from a loss of $397 million the year prior, as the company’s hedging losses reduced. Meanwhile, the total annuity account value of $248 billion was up 20% on Q3 2020.
During the quarter, the company returned $300 million to investors through a share repurchase scheme. At the end of the quarter, the cash and liquid assets at the holding company stood at $800 million – significantly higher than the minimum liquidity buffer.
“Our third quarter results reflect a healthy in-force business generating earnings and regulatory capital while exhibiting positive sales trends. In addition to our strong financial performance, we are building momentum operationally and strategically. The successful launch of our RILA offering is meeting demand across our broad distribution network,” said Laura Prieskorn, CEO of Jackson Financial.
After looking at these solid third quarter results, we see the recent insider buying at Jackson Financial as bullish. The trends within the business are strong, and in doubling his holding Mr. Kirkland is creating the impression that he believes that Jackson Financial’s share price is too low.