Insider trading research shows that insiders at small firms tend to earn larger profits from their purchases of company stock than insiders at large firms. The reason for this is that smaller companies are typically less researched than larger companies, meaning that they are often less efficiently priced.
In this report, we are going to highlight some insider buying at a small German company, Sino AG (XTP:GR). Sino is an online brokerage company that offers a trading platform for active traders. Through its platform, clients can trade stocks, bonds, futures, ETFs, funds, and currencies. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €212.7 million.
Sino AG: Insider Buying
Our data shows that between 20-21 May, three insiders purchased stock in a cluster buying pattern. On 20 May, CFO Ingo Hillen, Chairman Marcus Krumbholz, and Supervisory board member Stefan Middelhoff all purchased stock, picking up a total of 9,750 shares and spending about €920,000 in total on shares. Then, on 21 May, the CFO added another 45,905 shares, spending about €3.4 million on the stock.
This insider activity is worth highlighting for several reasons. Firstly, the cluster buying pattern is bullish. This buying pattern tells us that there is a consensus of opinion within the company that the stock is undervalued.
Secondly, these insiders have spent a substantial amount of money on stock. Our data shows that this buying activity represents the largest amount of insider buying within a quarter at Sino for several years. This suggests that they are confident about the outlook.
Finally, CFO Ingo Hillen has increased the size of his holding by 23% with his purchases. This is a significant increase. This indicates he has a high level of conviction in his purchases.
Strong H1 Results
Sino posted an impressive set of first-half results on 11 May. For the second quarter (ended 31 March), earnings amounted to €1.6 million or € 0.68 per share, compared to €866,000 or €0.37 per share in the corresponding same period of the previous year – an increase of 84% year on year.
Meanwhile, total operating income in the first half of the 2020/2021 financial year was €7.19 million – 75.6% above the value for the corresponding period of the previous year. Earnings were €2.4 million or €1.04 per share, up 338% on the figures posted in the same period last year.
In light of these strong results, we see the insider buying here as bullish. The buying activity suggests that insiders are confident about the future and that they expect the stock to move higher.