Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger companies, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small German company, JOST Werke AG (JST:AG). JOST Werke is a global manufacturer and supplier of safety-related components and systems for commercial vehicles. A major supplier of fifth wheel couplings and landing gear, it is the market leader in vehicle interface systems. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €543.1 million.
JOST Werke AG: Insider Buying
Our insider transaction data shows that on April 6, JOST CEO Joachim Duerr purchased 2,850 shares at a price of €34.45 per share. This trade cost the insider €98,183 and increased his holding to 9,850 shares.
This trade is worth highlighting for several reasons. Firstly, the trade has boosted the size of Mr. Duerr’s position by 41%. The fact that the insider has increased the size of his holding by such a large percentage indicates that he is confident the stock is set to move higher. It’s worth noting that this is the largest purchase from an insider at JOST for several years.
Secondly, Mr. Duerr has considerable industry experience. Before joining JOST in 2019, he held a number of management positions at commercial vehicle group MAN, including Director of Purchasing, Chairman of the Management Board of NEOMAN BUS GmbH, CEO of MAN Iberia and Head of Indian Operations in Pune, India. This means he is likely to have a good understanding of his company’s prospects.
Record 2021 Results
JOST Werke recently posted record results for 2021.
For the year, sales were up 32% to €1048.6 million. Meanwhile, profitability improved significantly with adjusted EBIT rising 43.2% to €104.8 million. On the back of these results, the group raised its dividend by 5%.
Looking ahead, the group noted that there are some challenges, but said that it expects further growth in 2022. Sales and adjusted EBIT margin are likely to grow in the mid-single-digit percentage range compared to 2021, with adjusted EBIT margin expected to remain stable.
“We look with confidence to the future and want to build on the successful fiscal year 2021. Our aim is to increase consolidated sales and adjusted EBIT in the mid-single-digit percentage range, compared to 2021," commented Mr. Duerr.
Despite these strong results, JOST Werke shares have fallen this year. Year to date, the stock is down about 30%. The purchase from the CEO here suggests that he expects the stock to rebound. We see his trade as a bullish indicator.