Top-level insiders tend to have a good understanding of their companies’ prospects. If they’re buying company stock, it’s generally a sign that they’re confident about the future and that they expect to see the share price rise.
In this report, we are going to highlight some interesting insider buying at Trelleborg AB (TRELB:SS). Trelleborg is a Swedish engineering company that specializes in polymer technology. Operating in 48 countries, it provides polymer solutions that seal, damp, and protect in demanding industrial environments. The company is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalization of SEK 51.9 billion.
Trelleborg: Insider Buying
Our insider transaction data shows that on March 28, two insiders at Trelleborg bought stock. Those who purchased shares were:
- CFO Fredrik Nilsson (4,525 shares @ SEK 212.02 per share)
- Senior Vice President of Communications and Human Resources Patrik Romberg (2,200 shares @ SEK 214.40 per share)
This insider trading activity caught our attention due to the fact that both insiders have increased their size of their holdings significantly. Our data shows that Mr. Nilsson’s trade has raised his holding from 3,475 shares to 8,000 shares, an increase of 130%, while Mr. Romberg’s trade has raised his holding from 901 shares to 3,101 shares, an increase of 244%. The fact that both insiders have upped their stakes substantially suggests that they are very confident the stock is set to rise.
Best Year in Its History
Trelleborg recently had the best year in its history in terms of sales, operating profit, and margins.
For the final quarter of the year, net sales were up 15% to SEK 8,768 million while EBIT was up 12% to SEK 1,211 million. This took net sales for the year to SEK 33,864 million, up 12% year on year, and EBIT to SEK 5,151 million, up 26% year on year. On the back of this performance, the group raised its dividend by 10% to SEK 5.50 per share.
Since the company’s 2021 results, it has announced that it will divest Trelleborg Wheel Systems to Yokohama Rubber Company in a €2.1 billion deal. This should reduce the cyclicality of the business and allow it to do more M&A in higher growth segments of the market. It should also enhance the scope for more buybacks.
In light of these developments, we see the insider buying here as a bullish indicator.