One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
Here, we are going to highlight multiple insider purchases at Strix Group PLC (KETL:LN). Strix Group is a global market leader in the design and manufacture of kettle controls. It also designs and produces other water temperature management components and water filtration products. It’s traded on the London Stock Exchange’s AIM market and currently has a market capitalization of £451.1 million.
Strix Group PLC: Insider Buying
Our insider transaction data shows that on April 4, four insiders at Strix Group bought stock. Those who bought shares were:
- CEO Mark Bartlett (134,249 shares @ £1.99 per share)
- CFO Raudres Wong (22,200 shares @ £1.99 per share)
- Chairman of the Board Gary Lamb (44,400 @ £1.99 per share
- Non-Executive Director Richard Sells (9,894 @ £2.02 per share)
In total, the four insiders spent just over £400,000 (approx. $550,000) on Strix stock.
Buying From Top-Level Insiders
We are interested in these insider purchases for two main reasons.
Firstly, the cluster buying pattern includes a lot of the key players at Strix Group. The CEO is responsible for the overall strategy of the business while the CFO controls its finances. The buying pattern here suggests that the people at the very top of the business are confident in its prospects and that they believe the shares are undervalued by the market.
Secondly, three of the four insiders have worked at the business for a long period of time which means they are likely to have an intimate understanding of its operations. Mr. Bartlett has been at Strix Group for 16 years while Raudres Wong has been at Strix for 11 years and has over 25 years of experience in corporate finance, business management, and mergers and acquisitions. Mr. Lamb is currently CEO of Manx Telecom PLC but up until 2007, when Strix Group was a private company, he was the Finance & IT Director of the business.
Strong Revenue Growth
Strix Group generated healthy growth in 2021 as it benefited from the LAICA acquisition and also generated solid organic growth.
Revenue for the year came in at £119.4 million, which was an increase of 25.3% on the prior year. Adjusted gross profit of £47.4 million was an increase on the £39.4 million figure produced in the year before. Adjusted profit before tax of £32.2 million was higher than the £30.9 million achieved in 2020. This was all achieved against a backdrop of cost pressures.
On the back of this performance, the group raised its full-year dividend by 6.4% to 8.35 pence.
“Strix has successfully delivered solid growth in adjusted profit after tax for the full year which is testament to how well the Company has dealt with the challenges of both pandemic and other headwinds. Strix Group remains committed to its dividend in line with its progressive dividend policy that is linked to underlying earnings, reflecting the Boards confidence in the outlook for the group going forward,” said the company.
Given the solid results and optimistic outlook statement, we have taken the view that the recent insider buying at the company is bullish. There appears to be a consensus within the business that the decline in the share price over the last six months has resulted in the shares falling well below their intrinsic value.