Top-level insiders such as CEOs and Chairmen tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the stock is attractive.
Here, we are going to highlight insider purchases by top-level insiders at Kerry Group PLC (KYGA:ID). Kerry Group is a food conglomerate with operations worldwide. The company manufactures its products in 14 countries and its goods are sold in over 70 countries. It is split into Food Ingredients, Kerry Foods, and Kerry Agribusiness. It is traded on the Dublin and London Stock Exchanges and currently has a market capitalization of €20.19 billion.
Kerry Group PLC: Insider Buying
Our insider transaction data shows that between November 26 and December 9, two insiders at Kerry Group bought stock. Those who bought shares were:
- CEO Edmond Scanlon (10,000 shares @ € 110.93)
- Chairman of the Board Philip Toomey (3000 shares @ €107.90)
In total, the two insiders spent close to €1.7 million (approx. USD $1.9 million) on Kerry Group stock.
Large Increase in Holding
These insider purchases came to our attention for two main reasons.
First of all, both insiders have upped their holding by a considerable amount. Mr. Scanlon has increased his stake by a third and Mr. Toomey by 50%. This suggests both insiders are very confident in the company’s future prospects. The total amount invested in their company’s stock is a large sum of money.
Secondly, the CEO is likely to know the company better than anyone else. He has been at the company for 25 years, having joined its graduate training program and has held senior roles throughout the group prior to becoming CEO in 2017. This means he is likely to be familiar with the business from top to bottom.
Improving Market Conditions
Kerry Group has seen many of its developed markets move towards more normalized economic activity recently and as a result, it posted strong Q3 results.
The reported revenue for the group increased by 6.3% in the period while the group trading profit margin was up 60 basis points. The company noted that consumer demand continues to be strong and that food services continue to improve. The company’s balance sheet remained strong, which will allow it to consider further acquisitions going forward.
“We see strong growth prospects across both the retail and foodservice channels, underpinned by a very good innovation pipeline and customer engagement. We will continue to invest for growth and the enablement of our business model, while pursuing M&A opportunities aligned to our strategic growth priorities. The Group continues to expect to deliver strong volume and earnings growth. Our full year outlook is unchanged and reflects the expected effect from the strategic portfolio developments as shown below,” said the company.
Having seen these strong results and optimistic outlook for the business, we believe the recent insider trading at Kerry Group is bullish. It would appear that the insiders believe that the market is undervaluing the group, given the momentum within the business and the strong demand for its products.