One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
In this report, we are going to highlight cluster buying at RenaissanceRe Holdings Ltd (RNR:US). RenaissanceRe is a global provider of reinsurance and insurance. Established in 1993 and headquartered in Bermuda, it has offices in the US, the UK, Australia, Ireland, Singapore, and Switzerland. The company is listed on the New York Stock Exchange and currently has a market capitalization of $6.8 billion.
RenaissanceRe: Insider Buying
Our data shows that on October 29, five insiders at RenaissanceRe Holdings purchased stock. Those who picked up shares were:
- President & CEO Kevin O’Donnell (15,000 shares @ $144.14 per share)
- CFO Bob Qutub (3,400 shares @ $144.14 per share)
- Chief Risk Officer Ian Branagan (3,440 shares @ 143.93 per share)
- Chief Underwriting Officer Ross Curtis (6,900 shares @ $144.14 per share)
- Chief Accounting Officer Jamie Fraser (1,500 shares @ 145.18 per share)
In total, these five insiders spent around $4.4 million on RNR stock.
Bullish Cluster Buying Pattern
This cluster buying pattern is very bullish, in our view.
For a start, all of those who have purchased stock are top-level C-suite insiders. These insiders are likely to have an in-depth understanding of the company’s financials.
Secondly, the five insiders have spent a considerable amount of money on stock. All five made large, high-conviction purchases. This suggests they are very confident the stock is set to move higher.
Flexibility to Create Value for Shareholders
RenaissanceRe’s recent third-quarter results showed a net loss of $450 million. This loss was the result of Hurricane Ida in the US and severe flooding in Northwestern Europe.
However, the Q3 results weren’t all bad. On the positive side, gross premiums written amounted to $1.77 billion, versus $1.14 billion a year earlier. Meanwhile, the group ended the period with total assets of $33.5 billion versus $30.8 billion at the end of last year.
Looking ahead, management said that the group’s strong balance sheet provides it with the flexibility to create value for shareholders.
“This was another active season for natural catastrophes and while our results for the third quarter reflect this volatility, we have maintained a robust capital position and our business fundamentals remain strong. As we look forward to 2022, our fortress balance sheet provides us with great flexibility to create value for shareholders. We believe we will have ample capacity to renew existing risk and underwrite new opportunities if sufficiently profitable, but are equally motivated to return excess capital to shareholders at what we consider very attractive multiples,” said President & CEO Kevin O’Donnell.
In light of this balance sheet flexibility, we see the insider buying here as a bullish indicator.