If a CEO is buying company stock, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
In this report, we are going to highlight some interesting cluster buying at LCI Industries (LCII:US). LCI Industries, through its wholly-owned subsidiary, Lippert Components Inc, supplies a broad array of highly-engineered components for the leading original equipment manufacturers (OEMs) in the recreation and transportation product markets, and the related aftermarkets of those industries. Its components, which are sold domestically and internationally, are used in recreational vehicles (RVs), buses, trailers, boats, trains, manufactured homes, and modular housing. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.64 billion.
LCI Industries: Insider Buying
Our insider transaction data shows that on March 31, two insiders at LCI Industries bought stock. Those who picked up shares were:
- President and CEO Jason Lippert (9,265 shares @ $108 per share)
- Board member James Gero (10,000 shares @ $105.52 per share)
In total, the two insiders spent around $2.05 million on stock.
It’s worth noting that another board member, Kieran O’Sullivan, bought 5,000 shares earlier in the month, spending about $560,000 on stock.
There are several things that stand out about this cluster buying pattern.
The first is that the insiders have spent a substantial amount of money on stock. Our records show that insider purchases at LCI Industries are quite rare. We can conclude, therefore, that the insiders are very confident the stock is set to move higher.
The second is that the CEO has made a large purchase. CEOs tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies. So, we see this large insider purchase as bullish.
LCI Industries recently posted strong results for the fourth quarter of 2021.
For the period, the group generated record net sales of $1.2 billion, up 55% year over year. Meanwhile, it posted record net income of $82.3 million, or $3.22 per diluted share, up 69% year over year. Both revenue and earnings were comfortably above Wall Street’s estimates.
The group noted that the robust growth continued into 2022, with sales in January rising 71% year on year to $526 million.
Looking ahead, management was optimistic in relation to the company’s growth prospects.
"Tailwinds which have supported our incredible growth remain strong, as hundreds of thousands of new customers over the last few years entered the outdoor lifestyle, seeing it as a convenient, affordable, and safe alternative to air travel and hotel lodging,” said President and CEO Jason Lippert.
“I am excited for the growth opportunities that lay ahead as we deliver value to our customers and shareholders in 2022," he added.
In light of the strong results here, we see the insider buying as a bullish indicator.