Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger businesses, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small US company, Manitowoc Co (MTW:US). Manitowoc is a leading provider of engineered lifting solutions. The company, through its subsidiaries, designs and manufactures mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes. It is listed on the New York Stock Exchange and currently has a market capitalization of $375 million.
Manitowoc Co: Insider Buying
Our data shows that on June 10, Manitowoc’s Chairman Kenneth Krueger purchased 34,500 MTW shares at a price of $12.49 per share. This trade cost the insider $431,036 and increased his holding to 123,472 shares.
Largest Insider Purchase Since 2018
Mr. Krueger has substantial company experience. He has been a director of the group since 2004 and previously served as interim President and CEO between October 2015 and March 2016. He is therefore likely to have a good understanding of Manitowoc’s prospects.
What’s interesting about this trade is that it represents the largest purchase from an insider at Manitowoc since June 2018. It has also boosted the size of the Chairman’s holding by 39%, which suggests the insider is very confident that the stock will move higher. Our Insider Model views the trade as bullish.
Long-Term Growth Story
In its recent Q1 results, Manitowoc advised that it is experiencing some challenges right now.
Revenue was lower than planned due to continuing supply chain and logistics challenges, and the company said that the recent acceleration of inflation, particularly in Europe, combined with further deterioration in its supply chain, will place added pressure on crane demand and its margins throughout the remainder of the year, with adjusted EBITDA expected to come in at the low end of guidance. It added that the Russia/Ukraine crisis, combined with the severe Covid measures taken in China, had further exacerbated the global macroeconomic environment.
However, management was confident that the medium to long-term growth story is still intact. “While we see clear signs of an economic slowdown in the near-term, the backdrop for a crane renaissance remains unchanged – crane fleets continue to age beyond historic levels, and the US infrastructure bill has been approved. Manitowoc will continue to invest in our four breakthrough initiatives and we remain committed to our CRANES+50 strategy, which is to grow our non-new machine sales by 50% in the next five years,” said CEO Aaron Ravenscroft.
In light of this longer-term outlook, we see the insider buying here as a bullish indicator.