Top-level corporate executives such as CEOs and CFOs tend to have a good read on their companies’ future prospects. If these insiders are buying company stock, it can be a sign that the outlook for the company is favorable.
In this report, we are going to highlight a large CEO purchase at Vistry Group PLC (VTY:LN). Vistry is a leading UK housebuilder that builds around 12,000 houses per year across the country. Working in close partnership with housing associations and government agencies, it is one of the UK’s leading providers of affordable housing. The company is listed on the London Stock Exchange and currently has a market capitalization of £2.3 billion.
Vistry Group: Insider Buying
Our data shows that on 4 March, Vistry’s CEO Greg Fitzgerald bought 53,618 VTY shares at a price of 9.26 GBP per share. This purchase – which cost the insider approximately 496,500 GBP – increased the size of his holding by 10%.
This director deal stands out for a couple of reasons. Firstly, Fitzgerald has a good track record when it comes to timing his purchases well. Last March, for example, he bought 15,570 Vistry shares at a price of £5.78 per share. Since then, the stock has nearly doubled.
Secondly, Fitzgerald is a very experienced insider. Previously, he was Chief Executive of UK property company Galliford Try PLC from 2005 to 2015, having previously been Managing Director of its house building division from 2003. Prior to this he was a founder and later Managing Director of Midas Homes, which was acquired by Galliford Try Plc in 1997. This experience means that he is likely to have a good read on the industry.
Vistry announced earlier this month that it expects its pre-tax profit to more than double this year. In its full-year results for 2020, the FTSE 250 firm advised that it was confident pre-tax profit would rise to at least £310 million, boosted by extended tax breaks for UK home buyers until October and the UK’s recently announced mortgage guarantee scheme. It also announced that it would be resuming its dividend with a 20p share final payout for FY2020.
“2021 has started well with strong demand across all areas. We have a strong forward sales position, with 64% of forecast units for 2021 already secured. Assuming stable market conditions, the Group is confident it will more than double profits in the year, with a profit before tax of at least £310m,” management said.
On the back of this outlook, several brokers raised their price targets for the group. Peel Hunt raised its price target to 1,300p (about 25% above the current share price) stating that recent trading has been positive and the government’s new mortgage guarantee scheme is helpful.
In light of these developments, we see the insider buying here as bullish.