Insider transactions can give investors a more complete view of activity within the world’s publicly-listed companies. No one knows a company’s prospects or product better than its leaders.
In this report, we are going to highlight a large insider purchase at KONE Oyj (KNEBV:FH). KONE is a global leader in the elevator and escalator industries that operates in over 60 countries. The company is listed on the OMX Nordic Exchange Helsinki and currently has a market capitalization of €30.3 billion.
Kone: Insider Buying
Our records show that this month, KONE Chairman Antti Herlin has purchased stock five times so far. Overall, the insider has bought 340,000 shares spending roughly €22 million on stock.
This insider activity looks interesting for several reasons. Firstly, the purchases are substantial.
Secondly, Herlin is a top-level insider. Not only has he served as Chairman of the Board since 2003 (and was previously CEO between 1996–2006) but he also owns approximately 33% of the company’s shares.
Third, his last purchases were timed very well. Our data shows that when equity markets were falling in March last year, Herlin stepped up to buy KONE stock. This move paid off – the stock has risen over 30% since.
KONE recently posted a solid set of quarterly results. While sales for the fourth quarter declined by 2.4% to €2,621 million, adjusted EBIT was up 4% to €381 million – 3% ahead of analysts’ forecasts. At comparable exchange rates, orders received grew by 7.9%. The earnings beat was primarily driven by China, where new equipment orders grew significantly.
"We had a strong finish to the year. Our orders received grew in all regions and order margins were stable demonstrating strong competitiveness," Chief Executive Henrik Ehrnrooth said in a statement.
As a result of this performance, KONE said it would propose an extraordinary dividend of €0.50 per share taking the total dividend to €2.25 per share.
In light of this solid performance, and the extraordinary dividend proposed, we see the insider buying here as bullish.