Corporate insiders have deeper insight into their companies’ operations than any outside analyst could ever hope to obtain. If these insiders are buying company stock, investors should take a closer look.
In this report, we are going to flag some interesting insider buying at Volati AB (VOLO:SS). Volati is a Swedish industrial group that acquires companies with proven business models and market leading positions. It is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalization of SEK 8.3 billion.
Volati: insider buying
Our records show that on 26 November, Karl Perlhagen, who was Chairman of the Board between 2005 and 2017 purchased 93,000 Volati preference shares at a price of SEK 640 per share. The total cost of this transaction was SEK 59.5 million (approx USD $7 million).
This insider purchase is significant for a number of reasons. Firstly, Perlhagen is a top-level insider. He co-founded the company in 2003 and served as Chairman for 12 years. It’s likely that he has a very good understanding of Volati’s recent performance and near-term prospects.
Secondly, this is a large, high-conviction purchase. It has increased the size of his holding in preference shares by 43%. Our records show that this purchase represents the largest amount of insider buying at Volati within a quarter for over two years.
Strong Q3 results
Volati posted a solid set of third-quarter results in October. For the quarter, net sales increased by 7% to SEK 1,828 million. Meanwhile profit after tax came in at SEK 97 million, a vast improvement on the loss of SEK 225 million posted in Q3 2019. The company said that the results confirmed the positive trend of very good earnings growth in its operations seen in recent years.
Looking ahead, management said that it expects further growth. “We are in excellent shape – financially and organizationally – which means that we have very good conditions to continue to grow strongly and create high shareholder value, as Volati has always done,” said Mårten Andersson, President and CEO.
In light of these results, and the confident tone from management, we see this large insider purchase as a bullish signal.