Company insiders tend to have access to the most up-to-date information on their company’s prospects. If they are buying stock it is generally a positive development as it suggests they expect the share price to move upwards.
Here, we are going to highlight an insider purchase at John Menzies PLC (MNZS:LN). John Menzies provides aviation services in the UK, the US, Australia, and internationally. It’s traded on the London Stock Exchange and currently has a market capitalization of £255 million.
John Menzies PLC: Insider Buying
Regulatory filings show that on 16 March the CFO of John Menzies, Alvaro Gomez-Reino, purchased 40,000 MNZS shares at a price of £2.99 per share. This purchase cost the insider approximately £120,000 and increased his holding by 50%.
Alvaro Gomez-Reino has significant experience in the aviation industry. Previously, he held the position of CFO at rival Swissport, which means he is likely to know the aviation industry well. He has also held senior roles at the large multinational company Ferrovial and its subsidiary Amey PLC which means he is likely to have a high-level of knowledge of the support services sector.
This purchase has increased his holding by 50% which signals that he strongly believes there is further recovery in the share price to come. Our data shows that Gomez-Reino’s last purchase was on 19 November. Since then, the share price has nearly doubled, which demonstrates that he has the ability to time his purchases well.
Expecting a Gradual Recover
John Menzies’ full-year results were severely impacted by Covid-19 as travel restrictions decimated the aviation industry. The share price has rebounded strongly over the last twelve months, however, on the expectation of an eventual return to normality and tight cost controls. Whilst revenue and profitability were impacted, £30 million of fixed costs were removed from the business and over two-thirds of those were permanent. This has positioned John Menzies well for the future. Strong credit management and revised banking covenants mean there continues to be sufficient liquidity headroom to invest in the future.
“The Covid-19 pandemic has brought about unprecedented challenges to our business as the effects on travel continued to have a significant impact on our global operations. Despite the difficulties it presented we acted decisively, adjusting the size of our operations and ensuring sufficient liquidity was maintained. We remain a strong business and well placed to benefit as the market recovers and the industry returns to structural growth,” said Philipp Joeinig, Chairman and Chief Executive.
On the back of a reassuring outlook we see the insider buying here as bullish. It suggests that the CFO is optimistic that there is further recovery in the share price to come.