Pandora A/S (PNDORA:DC)
12-month performance: +66%
Insider activity: Bullish
Insider buying pattern: Purchase by CEO
Recent news: Sales impacted by Covid-19 but positive outlook and sales guidance maintained
A CEO has the deepest insight into their company’s operations. External analysts can produce useful reports into companies but they are not seeing the most recent data and business development opportunities that a CEO is reviewing daily. If a CEO is buying stock, it is often a very good indicator that the outlook for the business is bullish and investors should take note.
In this note we are going to highlight a recent purchase of stock by the CEO at Pandora A/S (PNDORA:DC). Pandora A/S is a jewelry designer, manufacturer and retailer that sells its products in more than 100 countries. It is listed on the Nasdaq Copenhagen Stock Exchange and has a market capitalization of $7.9 billion.
Pandora A/S: insider buying
At the end of August, Pandora’s CEO Alexander Lacik purchased 38,560 shares in the company, spending a total of around USD $2.5 million on stock. This increased Lacik’s holding in Pandora by 31%. After this purchase, he now holds 161,628 shares worth approximately $12.9 million.
Source: 2iQ Research
Bullish purchaseThis stock purchase is significant for two reasons. First of all, the 31% increase in Lacik’s stake represents a significant investment in monetary terms and suggests Lacik is very confident in Pandora’s future prospects.
Secondly, Lacik made a significant investment in Pandora stock back in March this year at a price roughly 50% below current levels, demonstrating an ability to time his purchases well.
Recovery playPandora continues to be a recovery play despite the 144% rise in the share price since its lows back in March this year. The shares remain 50% below where they were trading in March 2016 and despite Covid-19 impacting sales in 2020 by up to one-fifth, the company has stated that it expects to make full-year guidance. The current management have turned around Pandora with a combination of cost cutting and strong branding which has been reflected by strong momentum in the share price. Citi has recently upgraded the jewelry maker to a ‘Buy’ from ‘Neutral’ and have turned more positive on the medium-term sales/earnings trajectory.
In summary, we see the recent insider buying by the CEO as bullish. It infers that the CEO is confident that the business will continue to recover which will lead to a further recovery of the PNDORA share price and continued upwards momentum.