Insiders may sell their company’s stock for a number of reasons. But they only buy stock for one reason – they expect it to go up.
Here, we are going to highlight insider trades at Swedbank AB (SWEDA:SS). Swedbank is a Swedish bank that provides financial services and products in Sweden, Estonia, Latvia, and Lithuania. It’s listed on the Stockholm Stock Exchange and currently has a market capitalization of SEK 166 billion.
Swedbank AB: Insider Buying
Regulatory filings show that on 27 April a Director of Swedbank, Goeran Bengtsson, purchased 116,500 SWEDA shares at a price of SEK 147.6 per share. This purchase – which increased the size of his holding significantly – cost Bengtsson approximately SEK 17.2 million (approx. $2 million). Then, on 30 April, Jens Henriksson, the CEO, purchased 3,000 SWEDA shares at a price of SEK 149.06 per share. Additionally, on 3 May, Per Nyman, a Director of Swedbank, purchased 1,000 SWEDA shares at a price of 148.05 per share.
This insider activity is worth highlighting for a couple of reasons. Firstly, the purchase by Goeran Bengtsson is significant in size and increases his holding substantially from a previous position of 1,000 SWEDA shares. This suggests he is very confident in Swedbank’s future prospects.
Secondly, the purchase of stock by the CEO and another Director tells us that a number of insiders believe the stock is undervalued currently and will rise. Our data shows that several other key board members bought stock alongside the CEO in February, signaling to investors that sentiment is positive amongst the majority of the top-level insiders at Swedbank.
Increase in Profitability
Swedbank has traded resiliently in Q1 2021 given the challenges it has faced due to Covid-19. Profitability increased by 10% on the prior quarter to SEK 4.975 billion while return on equity increased to 12.8% from 11.8%. Revenue from net interest income and net commission income were stable whilst asset management income increased. Credit impairments reduced to SEK 246 million from SEK 523 million in the prior quarter, which was encouraging.
“Swedbank’s capital and liquidity position is strong with a comfortable margin to the Swedish Financial Supervisory Authority’s requirement. This lays a stable foundation. We expect a robust economic recovery in the second half of 2021 as vaccination programs are rolled out around the world”, said Jens Henriksson, the CEO.
Given the resilient Q1 results and the encouraging outlook, we see the recent insider trading at Swedbank as bullish. It signals that key insiders at the company believe the share price has the further upside to come.