Top-level corporate insiders tend to have the most up-to-date information on their companies. If these insiders are buying stock, it signals that they’re confident about the future and that they expect the stock to rise.
In this report, we are going to highlight some interesting buying from a top-level insider at LVMH Moet Hennessy - Louis Vuitton SE (MC:FP). LVMH is a French luxury goods company that owns approximately 70 brands across the fashion, perfume & cosmetics, watches & jewelry, and alcoholic beverage industries. The stock is listed on the Euronext Paris and currently has a market capitalization of €260 billion.
LVMH: insider buying
Our records show that on 21 December, LVMH’s Chairman and CEO Bernard Arnault purchased 20,434 shares at a price of €489.36 per share. This purchase cost the insider approximately €10 million.
This insider purchase is significant for a number of reasons. Firstly, it is a substantial purchase. This indicates that Arnault – who is the largest shareholder in LVMH – is confident that the stock is undervalued at present.
Secondly, Arnault’s recent purchases have been timed well. Our data shows that the insider last purchased LVMH stock in March 2020 when it was trading below €300. Since then, it has risen above €500.
LVMH posted a disappointing set of third-quarter results in October. For the first nine months of the year, revenue was €30.3 billion, down 21% on the same period in 2019.
However, revenue in Q3 was only down 7% on an organic basis, reflecting a marked improvement in trends compared to the first half of 2020. And the performance of the group’s Fashion & Leather Goods segment was very encouraging, with sales up 12% year on year.
“The encouraging signs of recovery observed in June for several of the Group’s activities were confirmed in the third quarter in all regions, notably in the United States, and in Asia, which once again grew over the period,” the group stated.
Given this improvement in performance, we see the large insider purchase here as a bullish signal.