When we see insiders at small companies buying large amounts of stock, we usually take 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.
In this report, we are going to highlight insider buying at a small Swedish company, NOTE AB. NOTE is one of northern Europe’s leading contract manufacturing partners for electronics products. Its services include early-stage engineering services, batch production, and advanced aftermarket services. The company is listed on the Nasdaq Stockholm stock exchange and currently has a market capitalization of SEK 3.6 billion.
NOTE AB: Insider Buying
Our insider transaction data shows that between 13 September and 15 September, board member and majority shareholder Johan Hagberg purchased stock on three occasions. In total, the insider purchased 17,195 shares, spending around SEK 1.7 million (approx $203,000) on the stock.
This trade is worth highlighting due to the fact that Mr. Hagberg has made a number of well-timed transactions in the recent past. Back in June, we highlighted the fact that the insider had picked up 18,205 shares when the stock was trading around the SEK 101 to SEK 102 level. Since then, it has traded as high as SEK 140. Before this, the insider picked up a large amount of stock in 2018 when it was trading near SEK 20.
It’s worth noting that Mr. Hagberg – who has a background in mathematics – is a professional investor by occupation. So, he is likely to have a good understanding of the stock’s intrinsic value and future growth potential.
NOTE AB appears to have a lot of momentum right now.
For the second quarter of 2021, sales came in at SEK 642 million, up 28% year on year, while profit after tax increased by 40% to SEK 47 million. Operating margin for the period increased by 1.0 percentage point to 9.3%. The company noted that at the midpoint of the year, order backlog for delivery in the second half of the year, and in like-for-like terms, was over 40% above the previous year’s level.
Looking ahead, NOTE said that it is optimistic about the future due to record current and new business customers. The company believes it can achieve total growth of 30% for the full year thanks to its recent acquisition of iPRO, along with organic growth of 20%. For the full year, it expects to see an increased operating profit and a stronger operating margin.
Given the company’s momentum, we see the insider buying here as a bullish indicator. It suggests that Mr. Hagberg expects the stock to continue rising.