Insiders might sell their shares for numerous reasons, but they buy them for only one: they think the price will rise.
Here, we are going to highlight an insider purchase at Kaival Brands Innovations Group Inc (KAVL:US). Kaival Brands distributes electronic nicotine delivery systems and related components in the US. It’s listed over-the-counter (but has recently applied for a listing on the Nasdaq Stock Exchange) and currently has a market capitalization of $464 million.
Kaival Brands Innovations Group Inc: Insider Buying
Form 4 filings show that between 8 April and 9 April, the CEO at Kaival Brands Innovations Group, Nirajkumar Patel, purchased 194,875 shares at an average price of $2.26 per share. This purchase – which cost the insider approximately $440,000 – boosted his holding by 27%.
This insider trade is worth highlighting for several reasons. First of all, this purchase is large in monetary terms and has increased the CEO’s holding by a significant amount. This signals that he is confident in the company’s future prospects.
Secondly, Patel is an entrepreneur who has been involved in numerous companies. He founded Florida Independent Liquor Stores Owners Association and therefore has previous experience in the retail industry. He is also currently the CFO at Kaival Brands Innovations Group which means that he is likely to have a very good understanding of the business.
2021 Guidance Reconfirmed
Kaival Brands Innovations Group is a new business that has increased revenue very quickly, in a short space of time. Business operations only commenced in March 2020 and the company has already managed to achieve $100 million in revenues, which has led to an exponential increase in the share price. Revenue in 2021 Q1 was $37.3 million with a gross profit of $4.8 million and full-year 2021 guidance is for revenues between $400-$450 million.
"Given the significant expenses associated with infrastructure, start-up costs, marketing, legal, and many other business necessities, we are proud of our ability to reach profitability so early on in our development. The gross profit number provides a glimpse into our future net profits as we continue to scale the business in a smart and efficient operational manner. Given our current visibility, we remain very confident in our full-year fiscal 2021 revenue guidance of $400 million to $450 million," Mr. Patel said.
Considering these impressive results and the rapid growth at the company, we see insider trading here as bullish. It suggests that the CEO expects growth to accelerate further and that he continues to see upside in the share price.