CEOs tend to have a deep level of knowledge in relation to their companies’ operations and performance. If these insiders are buying company stock, it can pay to take a closer look.
In this report, we are going to highlight some bullish CEO buying at Schaeffler AG (SHA:GR). Schaeffler is a leading global supplier to the automotive and industrial sectors. Operating in over 50 countries, the company manufactures high-precision components and systems for powertrain and chassis applications as well as rolling and plain bearing solutions for a large number of industrial applications. It is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €1.2 billion.
Schaeffler AG: Insider Buying
Our records show that in the second half of April, Schaeffler’s CEO, Klaus Rosenfeld, purchased stock twice. On 21 April, the insider bought 20,000 shares at a price of €7.86 per share. Then, on 26 April, he picked up another 40,000 shares at a price of €7.79 per share. In total, Rosenfeld spent about €469,000 on Schaeffler stock.
A Top-Level Insider
This insider activity is worth highlighting for a number of reasons. Firstly, Rosenfeld has significant company experience. He joined the group as CFO in March 2009 and was appointed CEO in June 2014. This experience means he is likely to have a very good understanding of the company and its future prospects.
Secondly, Rosenfeld has a financial background. Previously, he served at Dresdner Bank as Deputy Head of Finance and Controlling. So, it’s likely that he knows what he is doing here.
Third, recent insider trades at Schaeffler have been timed well. For example, since we highlighted some cluster buying here in September 2020, the stock has risen about 30%.
Good Start to 2021
At Schaeffler’s Annual General Meeting on 23 April, the company stated that it had made a good start to the 2021 financial year. For the first quarter of the year, revenue came in at €3,560 million, up 11.2% on the prior year in constant currency terms. Meanwhile, the EBIT margin before special items in the first quarter was 11.3%, a significant improvement on the prior-year adjusted figure of 6.5%. The group noted that net income is showing positive impacts from cost measures taken last year.
Schaeffler said that progress in its e-mobility sector has been particularly pleasing. In 2020, this business division recorded an order intake of €2.7 billion, well above the budgeted target of €1.5 to €2 billion. The number of projects was also up 30% on the prior year. Encouragingly, the group said this positive trend had continued into 2021.
In light of this momentum, we see insider buying here as bullish.