If multiple insiders are buying company stock, it’s often worth taking a closer look. This buying pattern – which is called ‘cluster buying’ – is a particularly strong insider transaction signal.
In this report, we are going to highlight cluster buying at Rev Group Inc (REVG:US). Rev is a leading designer, manufacturer, and distributor of specialty vehicles in the US. Its products include fire trucks, ambulances, school buses, municipal transit buses, terminal trucks, street sweepers, recreational vehicles, and more. The company is listed on the New York Stock Exchange and currently has a market capitalization of $1.1 billion.
Rev Group: insider buying
Our insider transaction data show that on 11 June, four insiders at Rev Group purchased REVG stock in a cluster buying pattern. Those who bought shares were:
● CEO Rod Rushing (19,292 shares @ $15.87 per share)
● CFO Mark Skonieczny (7,000 shares @ $15.90 per share)
● General Counsel Stephen Boettinger (1,500 shares @ $15.64 per share)
● Chief Human Resources Officer Chris Daniels (3,200 shares @ $15.79 per share)
In total, these insiders spent around $490,000 on Rev Group stock.
Bullish cluster purchase
This cluster purchase is very bullish, in our view. All four of these insiders are part of the company’s Executive Team. This means that they are likely to have deep insight into the group’s operations and performance. The fact that they have spent nearly half a million dollars on company stock suggests that they are confident about the future. Our Insider Model views this buying activity as positive.
It’s worth noting that three of these insiders have made well-timed purchases in the recent past. Skonieczny and Daniels bought stock in January when it was trading under $10. Boettinger bought stock in March last year at $4.25. This is encouraging – it suggests that they have a good read on the stock.
Strong Q2 results
Rev Group recently posted very strong second-quarter results. For the quarter, net sales came in at $643.6 million, up 18% year on year, while adjusted EBITDA was $45.5 million compared to $7.6 million in the prior year quarter. Year-to-date net cash provided by operating activities was $37.1 million compared to $22.0 million in the prior year period.
As a result of this strong performance, the company raised its full-year fiscal 2021 adjusted EBITDA guidance to a range of $145 to $160 million (prior guidance was $125 to $135 million). It also reinstated its quarterly cash dividend at $0.05 per share, in-line with pre-pandemic levels.
“We are pleased with our second quarter performance that exceeded expectations and resulted in record first-half earnings,” said CEO Rod Rushing. “Our Board’s reinstatement of the quarterly cash dividend reflects their confidence in our improved financial position and performance,” he added.
In light of this strong performance, we see the insider buying here as a bullish indicator. It suggests that insiders expect the stock to rise from here.