Corporate insiders tend to have deep insight into their companies’ operations. If these individuals are buying company stock, it’s often a sign that business performance is strong and that the outlook for the stock is favorable.
In this report, we are going to highlight a large insider purchase at Orkla ASA (ORK:NO). Orkla is a Norwegian provider of branded consumer goods. Its strategic objective is to be a leading branded consumer goods company in the Nordics, Baltics, Central Europe, India, and other selected markets. The company is listed on the Oslo Stock Exchange and currently has a market capitalization of NOK 90 billion.
Orkla: Insider Buying
Our insider transaction data shows that on 3 June, Orkla board member Nils Selte bought 60,000 shares at a price of NOK 86.08 per share. This purchase cost the insider NOK 5.2 million (approx USD $622,500).
Mr. Selte is currently the CEO of Canica, a large, privately-owned investment company operating out of Norway and Switzerland. Canica is Orkla’s largest shareholder. This means that Mr. Selte is likely to have a thorough understanding of Orkla’s operating, financing, and investing activities.
What stands out about his purchase of 60,000 shares is the fact that it has increased the size of his holding by around 130%. This is a large increase which suggests he is very confident that the stock is set to move higher.
Strong Profit Growth
Orkla’s recent first-quarter results were solid. While revenue was on par with the first quarter of 2020, the company generated strong growth in profits. For the period, operating profit increased by 13.5% to NOK 1,297 million while pre-tax profit increased by 24% to NOK 1,434 million. Adjusted earnings per share rose 21% to NOK 1.27.
“The start of 2021 for Orkla’s Branded Consumer Goods business has been very positive. We achieved strong profit improvement and organic growth, despite facing strong comparables as a result of consumer stockpiling of food and cleaning products in the corresponding period of 2020,” commented President and CEO Jaan Ivar Semlitsch.
Looking ahead, the CEO was optimistic in relation to the outlook for the business. “The outlook in most of our home markets is now brighter. Now that vaccination is underway, we can look forward to further easing of infection control restrictions,” said Mr. Semlitsch.
In light of the profit growth and the confident tone from management, we see the insider buying here as bullish.