One of the most powerful insider trading signals is what’s known as ‘cluster buying.’ This is where multiple insiders are buying stock within a short space of time.
In this report, we are going to highlight some cluster buying at Shop Apotheke Europe NV (SAE:GR). Shop Apotheke owns and operates online pharmacies in a number of European countries. Through its online pharmacies, it sells prescription and non-prescription medications, beauty and personal care products, as well as natural food and health products. It is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €3.3 billion.
Shop Apotheke: Insider Buying
Our records show that between 4 March and 8 March, three insiders at Shop Apotheke purchased company stock. Those who bought stock were:
● CEO Stefan Feltens – 550 shares @ €175.35 per share
● Chief Brand Officer Dirk Bruese – 1,550 shares @ €187.96 per share
● Board member Jerome Cochet – 568 shares @ €176.76 per share
Combined, these insiders spent around €490,000 on SAE stock.
This cluster buying pattern is worth highlighting for a couple of reasons. Firstly, the purchases are large in nominal terms. Our data shows that this cluster of purchases represents the largest amount of insider buying at Shop Apotheke within a quarter for several years.
Secondly, our data also shows that two of the three insiders have increased the size of their holdings significantly. Bruese, for example, increased the size of his holding from 365 shares to 1,915 shares. This suggests that these insiders are confident the stock is set to continue rising.
Europe’s Leading E-Pharmacy
Shop Apotheke recently posted a very strong set of 2020 results that were ahead of the company’s guidance.
For the year, full-year sales grew 38% to €968 million. Meanwhile, adjusted EBITDA for the group amounted to €21.6 million compared to -€13.6 million in 2019, an improvement of €35.2 million year over year. During the year, the group gained a record 1.6 million additional active customers, bringing the total number of active customers to 6.3 million.
Looking ahead, the company said that it expects a continuation of the dynamic growth course in 2021 with an organically-driven sales increase of around 20% or more. The adjusted EBITDA margin is expected to improve again to 2.3% to 2.8%, from 2.2%.
“Considering our strengthened cash position, reduced costs of financing, and the more than doubling of our operational capacity, Shop Apotheke Europe is well-prepared on its path to become Europe's leading e-pharmacy of the future,” said CEO Stefan Feltens.
In light of this strong growth, and the confident tone from management, we see the cluster buying here as a bullish signal.