In the pursuit of alpha, there are few predictive factors more significant than insider transactions. No one knows more about a company’s prospects or products than its executives and directors.
In this report, we are going to highlight a large insider purchase at Teledyne Technologies Inc (TDY:US). Teledyne provides enabling technologies to sense, transmit, and analyze information for industrial growth markets. Its markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, medical imaging and pharmaceutical research. The company is listed on the New York Stock Exchange and currently has a market capitalization of $13.2 billion.
Teledyne Technologies Inc: Insider Buying
Form 4 filings show that on 29 January, Teledyne’s Executive Chairman Robert Mehrabian purchased 10,000 TDY shares at a price of $366.05 per share. This purchase cost the insider approximately $3.7 million.
This insider purchase stands out for several reasons. Firstly, it is a substantial purchase. The fact that Mehrabian has spent nearly $4 million on stock suggests he is confident the stock is set to rise. Secondly, insider purchases at Teledyne are not very common. Our data shows that the last insider purchase here was in mid-2017.
Third, Mehrabian – who is a materials scientist – has a wealth of experience both within the industry and at the company. He has served as the Executive Chairman of Teledyne since January 2019. Before this, he served as Chairman, President and Chief Executive Officer of the company between 2000 and 2018. He also held various senior executive positions at Allegheny Teledyne Incorporated (ATI) between 1997 and 1999, prior to the spin-off of Teledyne Technologies Incorporated. He is likely to have a good read on the company’s future prospects, given his experience.
Teledyne Technologies recently posted a solid set of fourth-quarter results. For the quarter, net income was $132.1 million compared with $115.7 million for the fourth quarter of 2019, an increase of 14.2%. Meanwhile, GAAP diluted earnings per share came in at an all-time record high of $3.48, an increase of 13.7% on the figure in the previous year. Cash flow from operations also hit a record high of $236.4 million.
Throughout the quarter, the company announced the acquisition of FLIR Systems, Inc for approximately $8.0 billion. This is expected to add uniquely complementary technologies, products, customers and applications to Teledyne's proven business model.
"We concluded 2020 with the best earnings, operating margin and cash flow in the company's history," said Mehrabian. "I have never been more excited about Teledyne's future,” he added.
Given these strong results, and the confident tone from the Executive Chairman, we see the insider buying activity here as bullish.