Insider buying can provide investors with valuable clues in relation to a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some interesting insider buying at Relx PLC (REL:LN). Relx is a global provider of information and analytics for professional and business customers. The group, which serves customers in more than 180 countries worldwide, operates across four main business segments: Scientific, Technical & Medical, Risk, Legal, and Exhibitions. It is listed on the London Stock Exchange and currently has a market capitalization of £41.9 billion.
Relx PLC: Insider Buying
Our insider transaction data shows that two board members at Relx have purchased stock in recent weeks.
On 24 September, Chairman Paul Walker purchased 16,000 shares at a price of £22.02 per share, spending £352,320 on stock.
More recently, on 5 October, Non-Executive Director Andrew Sukawaty bought 10,000 ADRs at a price of $29.51, spending $295,100 on stock.
Combined, these two insiders spent about £570,000 on Relx stock.
Largest Insider Purchase Since 2014
This trading activity caught our attention due to the size of the trade from Chairman Paul Walker. Our data shows that his purchase represents the largest insider purchase at Relx since 2014. The size of the trade suggests that he is very confident the stock is set to move higher.
It’s worth noting that Mr. Walker has a wealth of experience in the data industry. Previously, he was CEO of Sage Group plc for 16 years, having previously served as its CFO. He has also served as Chair at European Directories, Perform Group, and Sophos Group plc and as Non-Executive Director at Experian plc. So, he is likely to have a good understanding of his firm’s prospects.
Relx’s results for the first half of 2021 were solid.
For the period, revenue came in at £3,394 million, up 4% year on year, while adjusted profit before tax came in at £953 million, up 13% year on year. On the back of these results, the group announced a dividend increase of 5%.
Looking ahead, Relx said that it expects underlying revenue and profit growth rates to be slightly above historical trends in 2021 due to strong demand for its analytics and online identity services.
“RELX delivered a strong first half with underlying growth trends across almost all market segments returning to the improving trajectory that we saw in the early part of 2020. We believe that this improvement is a reflection of our continuing strategy of focusing on the organic development of increasingly sophisticated analytics and decision tools that deliver enhanced value to our customers across market segments. Recent acquisitions, which have supplemented our organic growth strategy, have continued to perform well,” commented CEO Erik Engstrom.
Since these results, several brokers have raised their price targets for the stock. Analysts at Credit Suisse have increased their target price from £24.30 to £25.00 while analysts at HSBC have raised their target price from £22.00 to £25.50.
In light of these developments, we see the insider buying here as a bullish indicator.