When an insider at a smaller company buys company shares it is worth taking a closer look. Insiders at small firms often generate large profits from their trades due to the fact that small-cap businesses are generally under-researched.
Here, we are going to highlight an insider purchase at a small German company, Katek SE (KTEK:GR). Katek is a German electronics service provider with factories both in Germany and in Eastern Europe. The company develops and manufactures customer-specific electronic components and systems for its global client base. It offers hardware and software development, testing services, prototyping, manufacturing, and other related services. It’s listed on the Frankfurt Stock Exchange and currently has a market capitalization of €380 million.
Katek SE: Insider Buying
Regulatory filings show that between October 5 and 6, Rainer Koppitz, the Founder/CEO of Katek SE, purchased 10,000 KTEK shares at an average price of €29.00. In total, the insider spent €290,000 on the stock.
Experienced Industry Veteran
These trades caught our attention due to the fact they represent the first insider purchases since the company’s IPO in May 2021. The fact that Mr. Koppitz has spent nearly €300,000 on Katek stock so soon after the IPO suggests that he is confident the stock is set to move higher.
It’s worth noting that Mr. Koppitz has significant industry experience. Before co-founding Katek, he held a number of key positions at businesses within the Industrial, IT, and Telecommunications sectors. Previously, he was CEO of NFON and B2X Care Solutions, where he gained exposure to businesses with multi-national interests. He was also CEO of Germany & Austria at BT Germany. So, he is likely to have a good understanding of his firm’s prospects.
Katek saw a big jump in key metrics in the first half of 2021.
For the period, revenue came in at €271 million, which was an increase of 48.5% on H1 2020. EBITDA of €17.7 million was up from €7.65 million a year prior and adjusted EBITDA was up by around 63% at €13.4 million. Operating margin of 5% for the first half was up 0.5% on the same period last year.
The guidance for full-year revenue was raised to a range of €535 million to €560 million and adjusted EBITDA expectations were moved up to a range of €27 million to €33 million. The company noted that whilst performance met expectations, it would have been significantly better had it not been for a supply chain crisis caused by the Covid-19 pandemic, which has led to an increase in procurement costs and postponed sales.
“We are also working on a number of other very interesting M&A opportunities and are assessing their potential. The focus here is on further strengthening our position in the high value segments and advancing our position in markets that could only be occupied organically in the very long term and at great expense,” said the Management Board within the H1 results.
Given the excellent H1 performance of the business and ambitious growth plans for the future, we see the recent insider buying at Katek as bullish. It suggests that the insider believes that the share price will move higher in the future.