One of the most bullish signals in insider transaction analysis is what’s known as ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
Here, we are going to highlight cluster buying at Pandora A/S (PNDORA:DC). Pandora is a jewelry manufacturer and retailer, based in Denmark. The company’s products are marketed in over 100 countries through more than 6,700 points of sale. It’s listed on the Nasdaq Copenhagen Stock Exchange and currently has a market capitalization of DKK 88.86 billion.
Pandora A/S: Insider Buying
Our data shows that between November 2 and November 4, six insiders at Pandora purchased stock at prices of between DKK 836.34 and DKK 878.00.
Those who bought shares were:
- President/CEO Alexander Lacik (430 shares)
- CFO Anders Boyer-Sogaard (1000 shares)
- Chairman of the Board Peter Ruzicka (2000 shares)
- Deputy Chairman Christian Frigast (5000 shares)
- Independent Director Isabelle Parize (1500 shares)
- Independent Director Catherine Spindler (405 shares)
In total, these six insiders spent about DKK 8.8 million on Pandora stock.
Bullish Cluster Buying
In our view this cluster buying is bullish. We have taken this view because the insiders buying Pandora shares have spent a significant amount of money on the company’s stock. This suggests that they are extremely confident that the prospects for Pandora remain strong.
Additionally, these insiders know Pandora and the retail sector very well. CEO Alexander Lacik has over 25 years of leadership experience at multinational companies within the consumer goods sector. Meanwhile, the Chair and Deputy Chair, who have invested the most money into Pandora stock, have both had extensive retail exposure. It's worth noting that Mr. Lacik made a well-timed buy last year.
2021 Guidance Upgraded
Pandora produced strong Q3 results driven by high growth in the US.
For the quarter, revenue came in at DKK 4.728 billion, well ahead of the DKK 4.070 achieved a year prior. Net profit of DKK 635 million was nearly double that earned in the same period last year.
The online performance was very encouraging and organic growth in that division was 2% higher than last year whilst it was 94% higher than the levels seen in Q3 2019.
“US represents a strategic priority for Pandora, and the strong performance is encouraging. The long-term aim is to double the US business vs 2019. Market data continues to suggest that Pandora US is growing faster than the market,” said the company.
It’s worth noting that on November 1, the company raised its 2021 guidance. Organic sales growth was raised to 18-20% from 16-18%. Meanwhile, the EBIT margin was moved up from 23-24% to 24-24.5%.
The combination of a strong Q3 update and a confident outlook for the business mean that we see the recent cluster buying at Pandora as bullish. There seems to be a consensus amongst a majority of insiders that the share price has further to run.