Corporate insiders tend to have superior knowledge of their firms’ operating, financing, and investing activities. If they’re spending millions on company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some large insider buys at The Quarto Group Inc (QRT:LN). The Quarto Group is a UK-based company that creates books and intellectual property products. Founded in 1976, it sells and distributes its products in over 50 countries today, through a variety of sales channels, partnerships, and routes to market. It is listed on the London Stock Exchange and currently has a market capitalization of £54 million.
The Quarto Group: Insider Buying
Our data shows that this month, Executive Director Chuk Kin Lau has made two large purchases of stock through a related company, 1010 Printing Limited.
On January 6, the insider bought 1,000,000 shares at a price of £1.25 per share. Then, on January 7, he added another 343,000 shares at a price of £1.25 per share.
In total, the insider spent around £1.7 million on QRT stock.
This trading activity is worth highlighting for a couple of reasons. Firstly, Mr. Lau has spent a substantial amount of money on stock. This suggests he’s very confident the stock is set to move higher. It’s worth noting that our records show that these purchases represent the largest amount of insider buying at The Quarto Group within a quarter for several years.
Secondly, ownership data shows that Mr. Lau – who was previously CEO of the company – is the largest shareholder here with a stake of around 45%. This means he is likely to have an excellent understanding of the company and its prospects.
The Quarto Group’s most recent trading update, published in August last year, showed that the company was performing well.
For the six months to the end of June 2021, revenue was up 21% to $56.9 million while profit before tax came in at $4.0 million versus a loss of $3.0 million a year earlier. At the end of the period, net debt had been reduced to $16.4 million from $37.4 million a year earlier.
Looking ahead, the company noted that freight costs could be an issue in the second half of the year. However, it advised that it had the right plans in place to capture all possible opportunities and deliver a satisfactory second half. It added that revenue growth had been boosted by new opportunities in custom publishing, and that it expects this to become a larger part of the business-to-business revenue in the coming years.
Given the solid recent results here, we see the insider buying as a bullish indicator. It suggests that Mr. Lau sees further share price upside.