Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.In this report, we are going to highlight some interesting insider buying at Polar Capital Holdings PLC (POLR:LN). Polar Capital is a boutique UK investment management company that offers a range of specialized funds. Since its foundation in 2001, it has grown steadily and now has 16 autonomous investment teams managing specialist, active and capacity constrained portfolios, with a combined AUM of around £24 billion. It is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £651 million.
Polar Capital PLC: Insider Buying
Our data shows that on January 14, Chairman of the Board David Lamb purchased 45,000 shares at a price of £6.86 per share. This trade cost the insider around £300,000 and increased his holding by close to 200%.
On the same day, Non-Executive Director Andrew Ross bought 30,000 shares at a price of £6.65 per share. This purchase cost Mr. Ross about £200,000 and increased his stake in the company by 75%.
More recently, on January 17, CEO Mark Rochussen picked up 20,000 shares at a price of £7.00 per share. This trade cost the insider £140,000.
Large Increase in Holdings
These insider transactions are worth highlighting for two main reasons.
Firstly, both Mr. Lamb and Mr. Ross have upped their holdings by a significant percentage. This indicates that they are very confident that the share price will move upwards in the future. It’s worth noting that Mr. Ross also upped his holding in Polar Capital towards the end of last year. Clearly, he is convinced the stock is undervalued at present.
Secondly, all of these insiders have a wealth of experience within the financial industry. Mr. Lamb has over 30 years’ leadership experience within the asset management sector, including as Managing Director and Chairman of the Investment Committee at St James’s Place plc, the UK’s largest wealth management group. Meanwhile, Mr. Ross has spent over 20 years in senior roles at investment and wealth management firms. Previously, he was CEO of HSBC Asset Management (Europe) Limited and Cazenove Capital Management. This experience means the two insiders are likely to have a good understanding of what the underlying value of the company is.
Polar Capital saw an encouraging increase in assets under management during the first nine months of the year.
Net inflows of £117 million in the three months up until 31 December meant that net inflows for the year to date were £800 million. An improvement in market conditions combined with an impressive performance from the company’s various investment funds resulted in assets under management increasing from £20.86 billion on 1 April to £24.31 billion by 31 December, an increase of 16%.
"We remain confident that, with our diverse range of complementary funds and focus on performance in our actively managed strategies, we are positioned to continue to perform well for our clients and will continue to generate net inflows. The net inflow momentum of the last quarter has continued into the first two weeks of January," said Gavin Rochussen, Chief Executive of Polar Capital.
Having looked at these impressive results and encouraging outlook for the business, we see the recent insider buying at Polar Capital as bullish. It would seem that the insiders are very bullish that the positive momentum within the business will continue and that they expect this to translate to a higher valuation on Polar Capital’s shares.