When insiders at small companies are buying a large amount of company stock, it’s often worth taking a closer look. Research shows that insiders at small firms tend to earn significantly higher profits from their purchases of stock than insiders at large firms do.
In this report, we are going to highlight some interesting insider buying at a small Norwegian company, MPC Container Ships ASA (MPCC:NO). MPC Container Ships is a shipping company that focuses on the ownership and operation of smaller container vessels deployed in regional and intra-regional services. The group, which at present has over 70 vessels in its portfolio, was initiated by investment company MPC Capital AG in 2017. It is listed on the Oslo Stock Exchange and currently has a market capitalization of NOK 8.8 billion.
MPC Container Ships: Insider Buying
Our data shows that on November 18, board member Dr. Axel Schroeder purchased 500,000 MPCC shares at a price of NOK 19.36 per share. This trade cost the insider NOK 9.7 million (approx. USD $1.1 million).
On the same day, three other insiders made smaller purchases worth a total of around NOK 400,000 (approx. $45,000).
Dr. Schroeder has extensive experience at MPC Group, having held positions within the group since 1990. Currently, he is managing partner of MPC Münchmeyer Petersen & Co. GmbH and MPC Participia GmbH. He has also chaired MPC Capital’s Supervisory Board since 2015. Previously, he was MPC Capital’s CEO from 1999 to 2015. This background means he is likely to have a very good understanding of the company and its intrinsic value.
What stands out about this trade from Dr. Schroeder is the size of the purchase. The fact that the insider has spent over $1 million on shares suggests that he sees a lot of value in the stock right now.
Full-Year Guidance Raised
MPC Container Ships’ recent Q3 results showed that the company has a lot of momentum right now.
For the quarter, the company posted total operating revenue of USD $118.5 million compared to $68.8 million in Q2 2021, and earnings per share of $0.11 versus $0.03 in Q2 2021. Operating cash flow was up significantly at $60.4 million versus $35.6 million in the second quarter.
On the back of this strong performance, the company raised its full-year guidance. It now expects revenues in the range of $360-365 million and EBITDA in the range of $305-315 million. Previous guidance was for revenue of $320-325 million and EBITDA of $210-215 million.
“We continue to witness historically strong container markets with significant demand growth and high freight and charter rates. This is further amplified by global supply chain disruptions, a situation that we believe is unlikely to ease anytime soon. In this unique market environment charterers continue to compete for tonnage whilst only limited newbuilds are anticipated to be delivered during the next two to three years. We expect the favorable conditions for a tight containership market to continue going forward,” said CEO Constantin Baack.
During the quarter, the group executed comprehensive refinancing and balance sheet optimization measures including the sale of nine vessels at attractive prices. It believes these measures will give it more flexibility and pave the way for the “substantial return of capital” to investors in the quarters and years ahead.
In light of these strong results, we see the insider buying here as a bullish indicator.