If multiple insiders are buying company stock simultaneously, it’s often worth taking a closer look at the security. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight cluster buying at Nordic Entertainment Group AB (NENTB:SS). Nordic Entertainment is a Swedish company that provides broadcast television and streaming services throughout Scandinavia. The group operates satellite TV platforms, TV channels, and video streaming services and also creates and distributes TV shows, commercials, feature films, and branded content. It is listed on the Stockholm Stock Exchange and currently has a market capitalization of SEK 37.5 billion.
Nordic Entertainment Group: Insider Buying
Our records show that in the second half of September, three insiders at Nordic Entertainment bought stock.
On 22 September, Robert Alenius, Head of Corporate Communications, bought 650 shares at a price of SEK 484.80 per share.
Then, on 24 September, President and CEO Anders Jensen bought 2,150 shares at a price of SEK 487.90 per share while Chair Pernille Erenbjerg picked up 3,980 shares at a price of SEK 485.84 per share.
In total, these three insiders spent around SEK 3.3 million (approx. $380,000) on Nordic Entertainment Group stock.
Bullish Cluster Buying Pattern
This insider activity is worth highlighting due to the fact that previous cluster buys here have turned out to be very profitable trading signals. In November last year, for example, we noted that three insiders had purchased NENTB stock when it was trading below SEK 400. Since then, the stock has traded as high as SEK 530.
What stands out about the latest cluster buy is that it contains purchases from two top-level insiders – the CEO and the Chair. Both of these insiders are likely to have a superior level of information in relation to business trends and the future outlook.
Strong H1 Results
Nordic Entertainment Group’s recent H1 results were impressive.
For the period, the group registered 23% organic sales growth with reported sales coming in at SEK 6,054 million. Adjusted net income from continuing operations was SEK 497 million, up 63% year on year. Growth from the group’s Viaplay segment – which makes up 35% of sales – was particularly strong at 36% year on year on an organic basis with 21% year-on-year subscriber growth.
Since these results, the group has posted several encouraging updates. In September, for example, it announced that Viaplay is set to launch in the UK, Canada, Germany, Austria, and Switzerland, and be available in a total of 16 countries by the end of 2023. As a result of this launch, the group expects 2020-2025 compound annual organic group sales growth in the upper end of target ranges of approximately 18-20%.
In light of these developments, we see the cluster buying here as a bullish indicator.