Insiders at small firms tend to earn larger profits from their purchases of company stock than insiders at large firms. The reason for this is that small companies tend to be less researched than large companies, and are often mispriced by the market.
In this report, we are going to highlight some interesting 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. Its products are used in a range of industries including defense, aerospace, healthcare, agriculture, and construction. It is listed on the New York Stock Exchange and currently has a market capitalization of $489 million.
Vishay Precision Group Inc: Insider Buying
Our insider transaction data shows that in June, board member Wesley Cummins has purchased VPG stock twice. On 2 June, the insider purchased 30,000 shares at a price of $35.07, spending $1.1 million on stock. Then, on 3 June, he added another 10,000 shares at a price of $34.16 per share, spending $341,600 on the stock. These purchases increased the size of his holding from 110,000 shares to 150,000 shares.
Strong Track Record
Mr. Cummins has a good track record when it comes to buying VPG stock. In November 2020, the insider bought 10,000 shares at a price of $26.83 per share. Since then, the stock has risen 34%. He also bought shares in June 2020 when the stock was trading at $23.50. Since then, the stock has climbed 53%.
It’s worth noting that Mr. Cummins is an investment professional. Currently, he is Chief Investment Officer of long-short hedge fund 272 Capital. However, previously, he was an analyst at Nokomis Capital, which has a substantial position in Vishay Precision Group. This means that he is likely to have a good understanding of the company. Our Insider Model views his recent purchases as very bullish.
29% Earnings Growth
Vishay Precision Group’s first-quarter results were solid. For the quarter, revenue was up 4.3% year on year to $70.6 million – slightly ahead of its guidance – while operating margin was 9.1% as compared to 6.9% in Q1 2020. Adjusted diluted earnings per share came in at $0.31, 29% higher than the $0.24 EPS figure reported a year ago.
Looking ahead, the company said that it expects net revenues to grow sequentially and be in the range of $71 million to $77 million for the second fiscal quarter of 2021. The company also advised that it has a strong book-to-bill ratio of 1.21, reflecting demand momentum across its businesses and end markets.
"We executed well in the first quarter, and achieved financial results within our target model. We grew our adjusted gross margin compared to the fourth quarter of 2020 and the same quarter a year ago. Our strong cash from operations and solid balance sheet give us the foundation to continue to make the strategic investments in our business to create additional stockholder value," said CEO Ziv Shoshani.
In light of these results, we see the insider buying here as bullish. The purchase from Mr. Cummins suggests that he expects the stock to continue rising.