Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some insider buying at Troax AB (TROAX:SS). Troax is a Swedish company that specializes in customizable safety solutions that protect people, property, and processes. Its products include warehouse partitioning, commercial partitioning, machine guarding solutions, and storage solutions. The company is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalization of SEK 16.5 billion.
Troax AB: Insider Buying
Our data shows that on February 7, Chairman Anders Mörck bought 2,000 shares at a price of SEK 316.98 per share. This trade cost the insider SEK 633,960 (approx. USD $69,300) and increased his holding to 4,000 shares.
While this insider trade is not huge in nominal terms, we think it’s still worth highlighting.
For a start, Mr. Mörck has doubled the size of his position with this trade. This suggests he is very confident the stock is set to move higher.
Secondly, our records show that Mr. Mörck – who has served as Chairman since 2020 – has made well-timed trades in the past. In March 2021, for example, the insider bought stock when it was trading near SEK 248. Since then, the stock has traded as high as SEK 469. Our model gives the insider a long-term Trading IQ of 109, which is high.
Large Dividend Increase
Troax’s recent Q4 results showed that the company has momentum at present.
For the period, order intake increased by 27% to €73.5 million while sales increased by 44% to €64.6 million. Meanwhile, operating profit increased to €11.3 million from €8.6 million a year earlier. Earnings per share for the period amounted to €0.14 versus €0.11 in Q4 2020.
On the back of these strong results, the Board of Directors proposed a dividend of €0.30 per share for the year, an increase of €0.10 on the prior-year dividend.
Despite the strong results, and the significant increase in the dividend, Troax stock has underperformed this year. Year to date, the stock is down around 40%.
The buying from the Chairman here suggests that he expects the stock to bounce back. We see the insider buying as a bullish indicator.