Corporate insiders tend to have the most up-to-date information on their companies’ operations. If these individuals are buying company stock, it’s often a sign that performance is strong and that the outlook for the stock is favorable.
In this report, we are going to highlight some interesting insider buying at Stagwell Inc (STGW:US). Stagwell is a digitally-focused global marketing firm that is headquartered in New York. Its services include advertising and marketing, data analytics and insights, business consulting, corporate communications, market research, social media strategy and communications, and e-commerce management services, and more. The company, which recently merged with MDC Partners, is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.2 billion.
Stagwell Inc: Insider Buying
Our data shows that between May 10 and May 12, investment company Madison Avenue Partners LP represented by board member Eli Samaha purchased 644,452 Stagwell shares at prices of between $6.79 and $6.91 per share. These purchases cost around $4.4 million and increased his holding to 6.398 million shares.
Mr. Samaha – who is the Founder and Managing Partner of Madison Avenue Partners – is likely to have done his research on Stagwell. That’s because his firm, which is a value-focused investment manager, is a major shareholder in the group with a holding worth around $45 million at the current share price.
What stands out about this trading activity is that it has boosted the size of Madison Avenue Partners’ position by over 10%. This is a significant increase. The fact that the insider has upped their stake by this amount suggests that they see a lot of value at the current share price.
Stagwell’s recent first-quarter results showed that the group has strong momentum at present.
For the period, net revenue amounted to $526.6 million, an increase of 233.2% versus the prior period, with pro forma organic net revenue growth of 24%. Meanwhile, net income came in at $12.7 million versus $4.4 million a year earlier. The group noted that adjusted EBITDA margin expanded 160 basis points year-over-year on a pro forma basis to 19.3% of net revenue as it began to see the benefits of expected cost synergies.
“While the GDP may be contracting, Stagwell is growing strongly. The merger has spurred revenue synergies immediately apparent in the big wins, significant industry awards, and integration of talent and technology across our network,” commented Chairman and CEO Mark Penn.
Looking ahead, Stagwell said it expects to generate revenue growth of 18-22% this year. It also expects to generate adjusted EBITDA of $450 million to $480 million versus EBITDA of $378 million in 2021.
In light of this growth, and the fact that the company currently trades at about 1.2 times estimated 2022 sales, we see the insider buying here as a bullish indicator.