If a CEO is buying company stock, it’s often worth taking a closer look. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
In this report, we are going to highlight a CEO purchase at Repsol SA (REP:SM). Repsol is an energy company that is headquartered in Madrid, Spain. The company has an integrated business model that ranges from oil and gas exploration and production to the commercialization of energy solutions for the home and mobility. It is listed on the Madrid Stock Exchange and currently has a market capitalization of €24.4 billion.
Repsol: Insider Buying
Our data shows that on May 31, CEO Josu Jon Imaz purchased 10,000 shares at a price of €14.95 per share. This trade cost the insider just under €150,000 and increased his holding to 559,846 shares.
Riding the Uptrend
This trade is worth highlighting due to the fact that Mr. Imaz – who has served as CEO since 2014 – has made a number of well-timed purchases in the recent past. In February 2022, for example, he picked up 10,000 shares when the stock was trading at €11.45. And in February 2021, he bought shares when the stock was trading near €10. In total, he has made six purchases since the start of 2021, riding the share price uptrend very well. His latest purchase, of another 10,000 shares, suggests that he believes the stock is set to keep rising.
Strong Q1 Results
Repsol recently posted strong Q1 results on the back of the surge in oil and gas prices.
For the period, the group generated net income of €1.39 billion, compared with €648 million in the same period of the previous year. Meanwhile, adjusted net income, which specifically measures the performance of the businesses, rose to €1.06 billion compared to €471 million in Q1 2021. Operating cash flow, excluding working capital, rose to €3.06 billion, up €1.44 billion on the prior-year figure.
As a result of this strong performance, the energy company announced that it would be lifting its dividend by 5%. It also said that it would be reducing the share capital through the redemption of 75 million treasury shares, representing approximately 4.91% of total share capital.
"These results demonstrate the strength of our integrated business model and the correct choice of path in our Strategic Plan. In 2022, we will continue to advance in our transformation and decarbonization objectives, contributing value to our shareholders and demonstrating our responsibility in supplying energy to our customers,” commented Mr. Imaz.
In light of these strong results, we see the insider buying here as a bullish indicator.