Top-level corporate executives tend to have an information advantage over other investors. If these insiders are buying stock then it is generally a positive development.
Here, we are going to highlight a large purchase from a top-level insider at Sandvik AB (SAND:SS). Sandvik is an engineering company that operates in the areas of mining and rock excavation, metal cutting, and materials technology worldwide. It’s listed on the Stockholm Stock Exchange and currently has a market capitalization of SEK 300 billion.
Sandvik AB: Insider Buying
Regulatory filings show that on 4 March, the Chairman of the Board, Johan Molin, purchased 260,00 SAND shares at a price of SEK 229.86 per share. This purchase, which cost Molin SEK 59.76 million (approx. USD $7.1 million), increased his holding from 260,000 shares to 520,000 shares.
This purchase is significant as it is for a large monetary amount and it also doubles the Chairman’s holding. This suggests he is extremely confident that the stock will go up in value.
It’s worth noting that Molin has significant experience within the engineering sector. As well as being Chairman at Sandvik since 2015, he was President and CEO of ASSA ABLOY for 13 years up to 2018 and President and CEO of Nilfisk-Advance from 2001 to 2005. This means he is likely to have a good read on the industry.
Sandvik recently advised that the pace of recovery that was noted at the beginning of October continued throughout the fourth quarter. Demand in the group’s long-cycle mining business was strong and the company saw a sequential uptick in its short-cycle business. Despite lower revenues due to Covid-19, the company delivered strong and improved adjusted margin of 20.1% for the quarter, while organic order intake grew by 3% year on year.
As a result of this recovery, the Board of Directors proposed an ordinary dividend of SEK 4.50 per share (versus SEK 0.00 for 2019). In addition, the Board proposed an extra dividend of SEK 2.00.
Given this increase in the dividend, we see the recent insider buying here as bullish. It suggests that the Chairman believes the green shoots will continue to come through which will have a positive effect on the share price.