One of the most bullish signals in insider transaction analysis is what’s known as ‘cluster buying.’ This is where three or more insiders at the same company have purchased stock within a short period of time.
In this report, we are going to highlight some recent cluster buying at Lindab International AB (LIAB:SS). Lindab is a Swedish company that specializes in 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 17.5 billion.
Lindab: Insider Buying
Our data shows that on 24 September, six insiders at Lindab, including the CEO and the Chairman, bought stock. The six insiders paid between SEK 229 and SEK 236 per share for their shares and in total, spent around SEK 5.7 million (approx. $650k) on the stock. The largest purchase was from Chairman Peter Nilsson, who picked up 13,000 shares at a price of SEK 230.26 per share.
This trading activity is worth highlighting due to the fact that cluster buys here in the recent past have been very profitable trading signals. In May, several insiders, including Chairman Peter Nilsson, picked up stock when it was trading near SEK 190. Meanwhile, in May 2020, several insiders bought stock when it was trading near SEK 85. In the last few months, Lindab stock has risen as high as SEK 260, generating big profits for the insiders who purchased stock in May 2020 and May 2021.
Growth Targets Raised
Lindab’s recent Q2 results exceeded market expectations.
Sales for the second quarter amounted to SEK 2,747 million, corresponding to sales growth of 24% year on year. Meanwhile, adjusted operating profit came in at SEK 356 million (adjusted operating margin of 13.0%), compared with SEK 222 million in Q2 2020.
Since these results, Lindab has raised its financial targets. Going forward, the group will target 10% sales growth per year (versus the previous target of 5%-8%) and an operating margin in excess of 10%.
“Lindab's performance has improved significantly in the last few years. We are now streamlining operations and after the divestment of the business area Astron Building Systems, we are focusing all our efforts on Ventilation Systems and Profile Systems. The strong balance sheet means that we can accelerate acquisitions and we will therefore further increase our growth ambition,” commented Chairman Peter Nilsson.
In light of these developments, we see the cluster buying here as a bullish indicator.