There are two main reasons insiders buy shares in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the business expect the company’s share price to rise.
In this report, we are going to highlight some interesting insider buying at Sinch AB (SINCH:SS). Sinch is a Swedish company that offers a cloud-based messaging platform. The company, which operates in nearly 50 countries worldwide, currently serves eight out of the 10 largest US technology companies. It is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalization of SEK 34.8 billion.
Sinch AB: Insider Buying
Our data shows that a number of insiders at Sinch have bought stock recently.
In late April, Chairman Erik Froeberg purchased 300,000 shares at a price of SEK 38.00 per share. He also bought 4.5 million shares at a price of SEK 44.26 per share through his investment company NEQST D2 AB. This NEQST D2 AB trade was worth approximately $20 million.
More recently, CEO Oscar Werner bought 74,000 shares at a price of SEK 40.44 per share on May 9. And board member Bridget Cosgrove made a smaller purchase on May 11, picking up 10,000 shares at a price of SEK 40.68 per share.
What stands out about this trading activity is that all three insiders have increased the size of their holdings significantly with their trades. Mr. Werner’s trade, for example, increased his holding by 148%. Mr. Froeberg’s personal trade, meanwhile, increased his stake by around 480%. The fact that the insiders have upped their holdings by such large percentages suggests that they are confident about the future.
We also think it’s interesting that both the CEO and the Chairman have bought stock recently. These are top-level insiders who are likely to have an intimate understanding of the business.
Strong Top-Line Growth
Sinch’s latest results, for the quarter ended March 31, 2022, showed that the company is generating strong growth right now.
For the quarter, net sales were up 96% to SEK 6,550 million while gross profit was up 156% to SEK 2,096 million. Adjusted EBITDA came in at SEK 760 million versus SEK 269 million a year earlier.
During the quarter, Sinch announced changes to its management team, adding Ed O’Hara, former CEO of Inteliquent, Will Conway, former CEO of Pathwire, and Paul Perrett, former CEO of MessageMedia.
It also entered into a 3+1+1 year credit agreement for approximately SEK 7,500 million with a syndicate of nine banks and made a three-year loan agreement with the Swedish Export Credit Corporation for USD $110 million, strengthening its financial position and further diversifying its sources of financing.
In light of these developments, we see the insider buying here as a bullish indicator.