A number of studies on insider transaction activity have found that the most profitable transactions occur in small-cap firms. This area of the market is often less efficient. This means there’s more potential for large share price movements.
In this report, we are going to highlight some bullish insider buying in a US small-cap stock, Vishay Precision Group Inc (VPG:US). Vishay Precision Group is a manufacturer of sensors and sensor-based measurement systems. It is listed on the New York Stock Exchange and currently has a market capitalization of $390 million.
Vishay Precision Group: insider buying
What’s caught our attention here is a large purchase from board member Wesley Cummins. Form 4 filings show that on 6 November, the insider purchased 10,000 VPG shares at a price of $26.83 per share. This purchase – which increased the insider’s holding by 10% – cost a total of $268,258.
Source: 2iQ Research
This insider purchase is significant for a couple of reasons. Firstly, while Mr. Cummins is currently Chief Investment Officer of 272 Capital, he was previously an analyst with Nokomis Capital. Nokomis is the largest shareholder in VPG and currently owns 10% of outstanding stock. This means he is likely to have an excellent understanding of VPG and its prospects.
Secondly, our records show that this is Cummins’ second large purchase this year. In mid-June, the insider purchased 100,000 VPG shares at a price of $23.50 per share, spending $2.4 million on stock. Since then, the stock has risen by about 23%. The recent purchase suggests that he still sees value. Our Insider Model views this second purchase as very bullish.
Revenue growthVishay Precision Group recently posted a solid set of third-quarter results. For the period, revenue was $67.5 million, up 0.2% on the same period last year, while adjusted diluted earnings per share was $0.40, up 8% on the $0.37 figure reported a year ago. Looking ahead, the group said it expects net revenues to grow sequentially and be in the range of $69 million to $75 million for the fourth quarter of 2020.
While Vishay Precision Group shares have enjoyed a good run since March, they are still down about 15% year to date. This purchase from Cummins suggests he believes the stock has further upside. We view this insider purchase as a bullish signal.