When a CEO purchases stock in their own company, it’s worth taking a closer look. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
In this report, we are going to highlight a substantial purchase from the CEO and Chairman of 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 Euronext Paris and currently has a market capitalization of €282 billion.
LVMH: Insider Buying
Our records show that from 22 March to 24 March, LVMH’s Chairman and CEO Bernard Arnault made multiple purchases, buying a total of 42,300 MC shares. These purchases cost the insider approximately €23.5 million.
Previous Insider Purchases Have Been Timed Well
This insider transaction is worth highlighting due to the fact that Arnault has made a number of very profitable stock purchases over the last 12 months. In March last year, for example, he made several large purchases when LVMH was trading under €300. Since then, the share price has nearly doubled.
Meanwhile, in December, he added another 20,434 shares to his holding when the stock was at €490. Since then, the stock has risen about 14%. Clearly, Arnault has a good read on the stock. This latest €7.3 million purchase suggests that he expects the stock to keep rising.
LVMH was impacted significantly by the pandemic last year, with full-year revenue decreasing 17%. However, the company saw a big improvement in performance in the fourth quarter of the year, with revenue for the period only down 3% year on year. Fashion & Leather Goods was the standout segment during Q4, with sales rising 18% year on year.
Since the company’s full-year results, which were posted in late January, a number of brokers have increased their price targets for the stock. Cowen and Company, for example, has raised its price target to €640 from €610. Citigroup, meanwhile, has lifted its price target from €620 to €627.
In light of this improvement in performance, we see the insider buying here as bullish.