CEOs are some of the most informed participants in the market. If these insiders are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight a bullish CEO purchase at Saga PLC (SAGA:LN). Saga is a UK-based provider of insurance and travel services to customers aged 50 and over. On the insurance side, it offers a variety of different insurance products, including home insurance and motor insurance. Meanwhile, on the travel side, it operates a cruise ship service. The company is listed on the London Stock Exchange and currently has a market capitalization of £536 million.
Saga PLC: Insider Buying
Our insider transaction data shows that on 5 May, Saga’s CEO, Euan Sutherland, bought 51,259 shares at a price of £3.86 per share. This purchase cost the insider just under £200,000.
This Insider Has a High Trading IQ
This insider trade is worth highlighting for several reasons. Firstly, it is a substantial purchase. Our data shows that it is the largest insider purchase at Saga for several years.
Secondly, it has increased the size of Sutherland’s holding by 194%. This suggests that Sutherland is very confident the stock is set to rise.
Third, Sutherland has a very high short-term Trading IQ of 134. This means that in the past, his purchases have been timed very well.
Signs of a Turnaround
Saga’s recent full-year results for the year ended 31 January showed that the company is slowly starting to turn things around a challenging few years. For example, after several years of declining insurance policy numbers, Saga-branded motor and home policies increased by 1.1% in the year. Meanwhile, underlying profit before tax in the company’s insurance division – which is where the group makes most of its money – rose 2.9% to £134.6 million.
On the travel side of the business, the company said that demand remains strong, with evidence of significant pent-up demand from customers ready to travel. It currently has total cruise bookings of £154 million for 2021/22 and 2022/23 combined, in comparison to £128m at the same point last year, representing a 20% improvement.
In terms of the outlook, management was quite optimistic.
“We are excited about the opportunities ahead. We look forward to relaunching our brand later in 2021 which will only enhance our ability to unlock the potential in Saga, returning the business to sustainable growth and creating significant long-term value for all our investors and stakeholders," said CEO Euan Sutherland.
On the back of these results, Credit Suisse raised its price target for the stock to 486p from 397p.
Putting this all together, we see the insider buying here as bullish.