Insiders tend to be value investors. If they’re buying company stock, it’s usually because they believe the stock is undervalued.
Here, we are going to highlight insider buying at MarketAxess Holdings Inc (MKTX:US). MarketAxess Holdings is a financial technology company that is based in the US. It is the market leader in the electronic trading of US corporate bonds, however, it also provides market data and offers post-trade services to the global fixed income sector. It is listed on the Nasdaq Stock Exchange and currently has a market capitalization of $10 billion.
MarketAxess Holdings: Insider Buying
Our insider transaction data shows that on April 22, a director at MarketAxess Holdings, Richard Prager, purchased 1,000 MKTX shares at a price of $271.25 per share. This purchase cost the insider around $270,000 and increased his holding to 2,149 shares.
We were drawn to this insider buying for two main reasons.
Firstly, Mr. Prager is a vastly experienced financial services executive that has a background in credit and electronic trading. He is currently a Senior Adviser with the data analytics firm Tresata but prior to this he was a Senior Managing Director at BlackRock Inc. Here, he was part of the Financial Market Advisory Business that gave advice to the US Government during the financial crisis. He worked his way up to lead the global trading teams at BlackRock having led the fixed income trading team before this. Prior to working at BlackRock he held a number of senior roles at Bank of America for eight years. This background means he is likely to have a good understanding of MarketAxess’ business as well as the factors that will drive its share price.
Secondly, this is the first large insider purchase at Marketaxess for several years. In doubling his holding, Mr. Prager is signaling that he is adamant that the shares have been oversold by the market.
Record Trading Volumes
MarketAxess Holdings recently posted solid Q1 results on the back of strong trading volumes in credit and US Treasuries.
For the period, revenue came in at $186.1, which represented the second-highest quarterly revenue figure ever and a 13% increase on the figure posted in Q4 2021. Meanwhile, operating income of $88 million was 21% higher than Q4 2021 and EBITDA of $106 million was 22% higher. The quarterly trading volume of $37.5 billion was higher than the $30.69 billion achieved a year prior.
“We have delivered these results as market conditions continue to improve, with wider spreads and increased spread volatility driving significant cost savings for our clients through Open Trading, our differentiated liquidity pool. We believe we are well positioned to capture the global e-trading opportunity ahead of us due to our expanded global product footprint, improving market conditions and our continued focus on trading automation and all-to-all trading,” said Rick McVey, Chairman and CEO of MarketAxess Holdings.
Having read through these solid quarterly results and picked up on the optimistic tone of the outlook statement, we believe the recent insider buying at MarketAxess Holdings to be bullish. The insider buying stock is a veteran of the credit markets who understands the electronic trading space well and in doubling his holding he appears to be very confident that the shares have been oversold.