Company insiders tend to have the most up-to-date information on their company’s current and future prospects. If they’re buying shares, it’s generally a positive development.
Here, we are going to highlight a large insider purchase at NKT A/S (NKT:DC). NKT develops, manufactures, and markets cables, accessories, and solutions worldwide. It offers high voltage cable solutions, including high voltage onshore and offshore AC and DC, city, and dynamic cables; medium voltage and universal cables; and low voltage building wires as well as other cables such as telecom energy cables. It’s listed on the Copenhagen Stock Exchange and currently has a market capitalization of DKK 11.8 billion.
NKT A/S: Insider Buying
Regulatory filings show that on 29 March the CEO/President, Alexander Kara, purchased 2,785 NKT shares at a price of DKK 269.30 per share. This purchase cost Molin approximately DKK 750,000 and increased his holding in the company by 16%.
High Trading IQ
Kara has a high short-term trading IQ of 128 meaning he has timed his purchases well in the past. Our data shows that he picked up a large amount of stock towards the end of 2020 at a price 30% below his most recent insider trading levels.
It’s worth noting that Kara is an internationally experienced executive who has a wealth of experience in the power distribution industry. He was recruited from ABB where he had worked since 1987 and between 2012 and 2014 he was head of ABB’s global power cables business which was subsequently bought by NKT. This means that he is likely to have a good read on the industry.
Improved Financial Results
2020 was a strong year for NKT with the company seeing a record order intake in its high-voltage division. All three of its business lines contributed towards an improved financial performance compared to 2019. Revenue for the year came in at €1.087 billion versus €945 million in 2019 and operational EBITDA was €56.7 million versus €15.1 million a year prior. The growth in orders was primarily driven by the ongoing European transition towards increased generation of renewable energy.
Looking ahead, NKT said that it expects revenue to increase to between €1.1 billion and €1.2 billion in 2021 and EBITDA to move up to between €80-110 million.
On the back of a strong 2020 and a positive outlook we see the insider buying at NKT as bullish. It leads us to believe that the insider trading here signals that the CEO/President believes that the share price will continue to rise.