Insider buying can provide investors with valuable clues regarding a stock’s potential. An insider will sell a stock for a variety of reasons. But they only buy stock for one reason – they expect it to go up.
Here, we are going to highlight a large insider purchase at Spin Master Corp (TOY:CN). Spin Master, a children’s entertainment company, creates, designs, manufactures, and markets various toys. It’s traded on the Toronto Stock Exchange and currently has a market capitalization of CAD $4.08 billion.
Spin Master Corp: Insider Buying
Regulatory filings show that on 3 March the Co-CEO of Spin Master, Anton Rabie, purchased 138,600 TOY shares at a price of CAD $38.60 per share. This purchase cost the insider approximately CAD $5.35 million and raised his holding by around 132%.
This insider purchase is substantial in monetary terms and has increased the CEO’s shareholding by over 100% – this would suggest he is very confident in the future prospects of the company. Our data shows that this was the most significant insider purchase at Spin Master for ten months.
It’s worth noting that Rabie is the Co-Founder of Spin Master and has led many functions within the business such as sales, marketing and human resources. This means he is likely to know the company exceptionally well.
Strong Growth in Digital Games
Spin Master has seen a strong recovery in its share price after a collapse during the early part of 2020. The recent Q4 results suggested that the company is well positioned for the future. Total revenue grew 3.6% to USD $490.6 million which was encouraging. Meanwhile, digital games revenue was up 404.8% to USD $31.8 million. Operational improvements meant that free cash flow was USD $123.7 million versus negative US $19.3 million in the year prior. The net cash position stood at a record CAD $320 million.
"We're proud of the significant operational improvements and cost efficiencies our team delivered in 2020, while simultaneously navigating the complexities of the global pandemic," said Ronnen Harary, Spin Master's Co-CEO. "At the outset, we were committed to resolving the operational challenges we faced in 2019. I am pleased to say that we achieved our goal through significantly improved focus and execution in every function across Spin Master globally. We are particularly excited with the strong growth we saw in our digital games business led by Toca Life World.”
Given the encouraging Q4 update, we see the insider buying at Spin Master as bullish. The significant buying by the key insider after the Q4 results suggests he sees further upside in the Spin Master share price.