Top-level corporate insiders have deep insight into their companies’ operations and future prospects. If these insiders are buying company stock, it can be a bullish signal for investors.
In this report, we are going to highlight some interesting insider buying at SGL Carbon SE (SGL:GR). SGL Carbon is a manufacturer of products and solutions based on carbon fibres and specialty graphites. It currently has over 30 production sites across Europe, Asia, and North America. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €588 million.
SGL Carbon SE: Insider Buying
Our records show that already this month two insiders at SGL Carbon have purchased stock. On 4 January, CFO Thomas Dippold bought 25,600 shares at a price of €3.71 per share. Then, on 8 January, CEO and Chairman Torsten Derr bought 25,000 shares at a price of €4.32 per share and on 15 January bought 55,000 shares at a price of € 4.85 per share. Combined these insiders spent over €450,000 on stock.
This insider activity stands out for two reasons. Firstly, both insiders have increased the size of their holdings substantially. Dippold’s purchase of 25,600 shares increased the size of his position by 73%. Meanwhile, Derr’s purchase of 80,000 shares boosted the size of his holding by 131%. This indicates these insiders are quite confident that the stock is currently undervalued.
Secondly, both of the insiders have recently timed their trades well. Our data shows that both purchased SGL stock in November, when it was trading near €3.20. Since then, the stock has risen to €4.80.
RestructuringSGL Carbon recently announced that the mid-term prospects for the group have been impacted by the coronavirus and structural changes in some markets. Development in the company’s automotive and aerospace segments has been lower than expected. However, its wind energy business is growing much stronger than previously planned.
As a result of these challenges, SGL has decided to execute an extensive restructuring program with planned earnings improvement measures totaling more than €100 million until 2023. This will include reducing the employee count by 500, as well as substantially reducing indirect spend. The company believes that this restructuring program will sustainably strengthen the profitability and competitiveness of the company.
“We have laid the foundation for the sustainable transformation of the company towards a leaner, profitable and successful SGL Carbon", commented CEO Torsten Derr.
The recent insider buying here suggests that the CEO and the CFO expect the restructuring to deliver strong results. We see this insider transaction activity as bullish.