When a CEO buys shares in their own company, it’s often worth investigating the stock further. It’s not a stretch to say that CEOs are some of the most informed participants in the market.
In this report, we are going to highlight a large CEO purchase at Munich Re Co (MUV2:GR). Munich Re is a leading provider of reinsurance, primary insurance, and insurance-related risk solutions. The company is globally active and operates in all lines of the insurance business. It is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €32.3 billion.
Munich Re: Insider Buying
Our insider transaction data shows that on 8 July, CEO Joachim Wenning bought 1,105 MUV2 shares at a price of €225.87 per share. This purchase cost the insider approximately €250,000.
A Bullish Purchase
This trade stands out for a couple of reasons. Firstly, it is large in size. The fact that the CEO has spent around €250,000 on stock suggests that he is confident the stock is set to move higher.
Secondly, Mr. Wenning has made well-timed purchases in the past. In March last year, for example, the insider bought 3,425 shares at a price of €149.21 per share. Since then, the stock has risen more than 50%.
It’s also worth noting that a number of other insiders at Munich Re have purchased stock recently. Our data shows that since the start of May, three members of the Executive Board have added to their positions. This suggests that sentiment towards the stock from within the company is generally very positive.
On Track to Hit Profit Targets
In early May, Munich Re advised that it is on track for its 2021 profit target after stronger-than-expected first quarter earnings. It added that the market environment in reinsurance continues to be favorable and that it expects the impact of the pandemic in 2021 to be “limited.”
In Munich Re’s April Q1 results, the company posted a profit of €589 million, up from €221 million in Q1 2020. The insurer said that the increase in profit was a result of good operational development overall, an investment result that was within expectations, and a very good performance from ERGO group. For the quarter, return on equity amounted to 10.4% versus 3.9% in Q1 2020.
In light of these results, we see the purchase from the CEO here as a bullish indicator.