If multiple insiders are buying company stock within a short period of time, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
Here, we are going to highlight a cluster buying pattern at Neo Performance Materials Inc (NEO:CN). Neo Performance Materials is a Canadian company that processes and manufactures advanced industrial materials. Its products include advanced magnetic materials, speciality chemicals, and technology metals, and it also has a water purification system. It’s listed on the Toronto Stock Exchange and currently has a market capitalization of CAD $495 million.
Neo Performance Materials Inc: Insider Buying
Our insider transaction data shows that between May 18 and May 31, three insiders at Neo Performance Materials bought stock. Those who bought shares were:
- President and CEO Constantine Karayannopoulos (7,600 shares @ CA $13.00 per share)
- CFO Rahim Suleman (10,000 shares at CA $12.25 per share)
- Chairperson Claire Kennedy (3,500 shares at CA $13.10 per share)
In total, the three insiders spent just over CAD $265,000 (approx. USD $200,000) on stock.
Senior Insiders Buying Stock
The insider buying here is interesting for a few reasons.
Firstly, it is noteworthy that both the CEO and the CFO have purchased stock. These two insiders are responsible for the strategy of the company and are able to access real-time information that allows them to assess how the company is performing. The CEO has been working for Neo Performance Materials and its predecessor for over 20 years. Meanwhile, Ms. Kennedy has been a director since 2017 but she also served on the Board of Directors at Neo Material Technologies from 2010 to 2012, which means she is likely to be well acquainted with the business.
Secondly, this is the first insider buying since the end of 2020 when the CEO and Ms. Kennedy both bought stock at the CAD $12.10 level. It’s worth noting that the stock performed well in the following months.
Record Q1 Results
Neo Performance Materials recently published strong Q1 results, in which it posted new Q1 records for quarterly sales, net income, and adjusted EBITDA.
The Q1 2022 revenue figure of $166.3 million was 27.1% higher than Q1 2021. Meanwhile, the adjusted EBITDA figure of $33.1 million for the quarter was up 47.6% on the year prior. At the end of the period, the company was sitting on a cash balance of $61.1 million.
“While the world has been impacted by many macroeconomic headwinds, causing volatility across all sectors, all of our plants continued to service the needs of our global customers with relentless focus, resulting in strong financial performance,” said Mr. Karayannopoulos.
Having read through these very strong first quarter results, we are of the opinion that the recent insider buying at Neo Performance Materials is a bullish event. It suggests that those at the top of the company expect the company’s impressive performance to continue, and that they believe the company’s shares are likely to move higher in the future.