If a CEO is spending a large amount of money on company stock, investors should take note. CEOs tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
Here, we are going to highlight insider buying by the CEO at JDE Peet’s NV (JDEP: NA). JDE Peet’s is a beverage company that is predominantly focused on coffee and tea. The company has a global presence and is active in over 100 markets. It’s listed on the Euronext Amsterdam stock exchange and currently has a market capitalization of €13.7 billion.
JDE Peet’s NV: Insider Buying
Our insider transaction data shows that on April 12 and April 13, the CEO at JDE Peet’s NV, Fabien Simon, purchased 15,015 shares at an average price of €26.62. This purchase cost the insider around €400,000 (about $430,000).
This trading activity looks interesting for two reasons. Firstly, Mr. Simon has a financial background. Before taking on the role of CEO at JDE Peet’s, he was a Partner at investment firm JAB, which is a large shareholder in JDE Peet’s. This means he is likely to be very capable of accurately assessing the intrinsic value of the business. It’s worth noting that Mr. Simon was instrumental in orchestrating the IPO of JDE Peet’s so he probably knows the business extremely well.
Secondly, Mr. Simon has spent a significant amount of money on company stock. This indicates to us that he is very confident that the weakness in the shares is unwarranted and that the market is undervaluing the business.
JDE Peet’s recently posted a solid set of 2021 results.
Organic revenue was up 6.1% for the full year to €7,001 million and the business saw revenue accelerate during the second half with sales jumping 7.9%. The company was able to lead on price increases to help combat inflationary pressures. As a result, organic adjusted EBIT increased by 1.5% to €1,304 million. Underlying EPS moved upwards by an impressive 13.7% to €1.79. The leverage was reduced to below 2.7x as free cash flow increased to €1,368 million.
“I am very pleased with JDE Peet’s' performance in 2021. We delivered on all our commitments, in a high-quality way, in another year of unexpected global disruptions. This year, we became a nimbler global coffee & tea pure player and our brands emerged stronger. This gives me confidence that JDE Peet’s can successfully navigate an unprecedented year of inflation in 2022,” said Fabien Simon, CEO of JDE Peet’s.
Having viewed these full-year results and read the optimistic outlook statement from Mr. Simon, we believe the recent insider buying at JDE Peet’s to be a bullish event. Despite a difficult macro-economic environment, it appears that the business is making strong progress and in buying up stock the CEO is signaling that he believes the shares have been oversold.