Insider purchases can provide vital clues to investors. Insiders sell stock for a number of reasons. But they only buy stock for one reason – they expect the share price to rise.
Here, we are going to highlight some interesting insider purchases at Lindab International AB (LIAB:SS). Lindab International is a Swedish company that develops, manufactures, and distributes construction and ventilation products and solutions. The group operates in the Nordic region, Western Europe, and the CEE/CIS and generates 80% of its sales from the non-residential property sector. It’s listed on the Stockholm Stock Exchange and currently has a market capitalization of SEK 15.57 billion.
Lindab International AB: Insider Buying
Our data shows that in May, seven insiders at Lindab purchased stock. The largest purchase was from Chairman of the Board Peter Nilsson on 7 May. This purchase (11,000 shares at a price of SEK 184.53 per share) was worth around SEK 2 million (approx USD $245,000). In total, the seven insiders spent around SEK 3.1 million (USD $380,000) on stock.
This buying activity stands out due to the large number of insider trades within such a short time period. This ‘cluster buying’ pattern signals that multiple individuals within the company are confident in relation to Lindab International’s future prospects.
It’s worth noting that insiders at Lindab have timed their purchases well in the past. We highlighted stock purchases by insiders here at significantly lower levels back in February 2020 and suggested in our report that the insider buying was a bullish signal. This was a good call as the stock has more than doubled since then.
Lindab International produced an encouraging set of Q1 results that set a solid platform for the rest of the 2021 fiscal year. Whilst sales were slightly down on the prior year, they remained constant when adjusted for currency changes. Operating profit increased to SEK 193 million from SEK 184 million a year prior. The operating margin climbed to 8.6% from 7.9% in Q1 2020. Earnings per share were slightly higher at SEK 1.83 per share and cash flow in the quarter increased significantly to SEK 60 million from SEK 23 million a year before.
“Lindab starts the year in a strong way. The positive trends from the end of the previous year continued into the beginning of 2021. The two largest business areas, Ventilation Systems and Profile Systems, showed organic growth. The operating margin continued to improve compared with the corresponding period last year and was a record high for the first quarter,” said CEO Ola Ringdahl.
Given these reassuring results, we see the recent insider purchases at Lindab International as a bullish indicator. The purchases suggest that numerous insiders believe the share price has further to run.