Research shows that following insider buying at smaller companies tends to be a more profitable strategy than following insider buying at larger firms. Smaller companies are less researched than larger companies, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small US company, Vishay Precision Group Inc (VPG:US). Vishay Precision Group is a manufacturer of sensors and sensor-based measurement systems that serves customers in a range of industries including the defense, aerospace, healthcare, agriculture, and construction industries. The company is listed on the New York Stock Exchange and currently has a market capitalization of $435 million.
Vishay Precision Group Inc: Insider Buying
Our data shows that between February 18 and February 22, board member Wesley Cummins bought 30,000 VPG shares at an average price of $32.26 per share, spending around $970,000 on stock. This buying activity increased his holding to 225,000 shares.
This trading activity is worth highlighting due to the fact that Mr. Cummins – who is an investment professional – was previously an analyst at Texas-based hedge fund Nokomis Capital, which, in the recent past, has been one of Vishay Precision Group’s largest shareholders. So, it’s fair to assume that Mr. Cummins knows the company well.
Additionally, Mr. Cummins has made some well-timed trades here over the last few years. For example, in mid-2020 he spent $2.4 million on stock when it was trading at $23.50. Since then, it has traded as high as $40.
Strong Quarter and New Structure
Vishay Precision Group’s recent Q4 results showed that the company continues to grow at a rapid rate.
For the period, revenue came in at $90.0 million, an increase of 19.3% year on year. Meanwhile, adjusted diluted earnings per share were $0.56, as compared to $0.43 a year earlier. Adjusted operating margin was 11.4%, as compared to 10.7% reported a year earlier. The group noted that order trends in the fourth quarter remained firm across the majority of its markets, and that it ended the quarter with a book-to-bill of 1.06 and a record level backlog of $150.5 million.
"We delivered another strong quarter, which capped a successful year for VPG. Fiscal 2021 was one of the best years in VPG’s history, as we grew our fiscal 2021 sales by 17.8% and our adjusted diluted EPS by 42.0%,” commented CEO Ziv Shoshani.
In its results, VPG announced that in the fourth quarter of 2021, it had formally adopted a new operationally diversified structure and strategy, and organized its business into three new reporting segments: Sensors, Weighing Solutions, and Measurement Systems. The group believes that the change in structure will enable it to capture emerging opportunities in semiconductor test and production, consumer technology, electrification, increased safety testing, and regulatory requirements.
In light of these developments, we see the insider buying here as a bullish indicator.