If multiple insiders have the confidence to purchase company stock, it can be worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight some cluster buying at Tupperware Brands Corp (TUP:US). Tupperware Brands is a US consumer products company that sells design-centric preparation, storage, and serving solutions for the kitchen and home. Its products – which are eco-friendly – are distributed in approximately 80 countries around the world. The company is listed on the New York Stock Exchange and currently has a market capitalization of $1.4 billion.
Tupperware Brands: Insider Buying
Our records show that between 12 March and 15 March, five insiders at Tupperware Brands bought stock in a cluster buying pattern. Those who purchased shares were:
● CEO Miguel Fernandez (20,000 shares @ $24.95)
● CFO Cassandra Harris (2,000 shares @ $24.15)
● Executive Vice Chairman (20,475 shares @ $24.36)
● President, Commercial Patricio Cuesta (3,000 shares @ $27.79)
● Chief Legal Officer & Secretary Karen Sheehan (2,012 shares @ $24.79)
Combined, these insiders spent just under $1.2 million on Tupperware stock.
This cluster buying pattern is significant for several reasons. Firstly, the individuals that have bought stock are all top-level insiders. These insiders are likely to have deep insights into the company’s operations and performance. It’s interesting to see that the Chief Legal Officer has purchased stock. Generally speaking, these individuals tend to be quite risk averse.
Secondly, these insiders have purchased stock after a huge run in the share price. This time last year, Tupperware shares were changing hands for just $1.50. The fact that they are buying now, after such a large rise, suggests that they are very confident the stock is undervalued.
Tupperware recently posted a good set of fourth-quarter results that showed that the company’s turnaround is under way. For the quarter, sales were up 17% year on year to $489.6 million while adjusted diluted earnings per share came in at $0.14, compared to $(0.63) in the prior year period.
Over the full year, the company achieved gross cost savings of $192 million and generated free cash flow of $197.6 million, an improvement of $137.2 million versus 2019.
"The results show that our efforts to fix the core business are beginning to take hold as our sales force realize geography is no longer a barrier to reach new customers as they grow their business through social media platforms and digital tools. Additionally, we continue to provide real-time solutions to consumers' needs to prepare food, minimize food waste and decrease use of single-use items," said Miguel Fernandez, President and Chief Executive Officer of Tupperware Brands.
"As we move into 2021, we believe consumers give us permission to expand product categories, and together with increased access points, allows us to grow our business to match the power of the Tupperware brand," he added.
In light of the progress the company has made recently, we see the cluster buying here as a bullish signal.