High-level company insiders should possess a deeper understanding of a company than any external analyst ever could. It is very interesting therefore when these insiders purchase stock.
Here, we are going to highlight a large insider purchase at Volution Group (FAN:LN). Volution manufactures and supplies ventilation products to residential and commercial construction markets in the UK and internationally. It is listed on the London Stock Exchange and currently has a market capitalization of £443 million.
Volution Group: insider buying
Regulatory filings show that on 2 November the Chairman of the Supervisory Board, Paul Hollingworth, purchased 16,704 FAN shares at a price of £2 per share. This purchase boosted his holding by circa 50%.
Source: 2iQ Research
Largest director deal since 2018
This Chairman purchase is interesting because our data shows it is the largest purchase since 2018. This suggests the insider is confident the stock is undervalued right now.
Hollingworth previously spent nine years at UK-based industrial products provider Electrocomponents during which time the shares rose 400%. This suggests he knows what makes a successful company. FAN shares have risen nearly 20% since he made his first purchase in May 2019.
Upbeat full-year resultsVolution Group inserted a bullish trading statement into their full-year results. It advised that it had seen a ‘strong start to the new financial year’ and that it had enjoyed 7% organic growth in the first two months of the trading year. Given the lurking presence of Covid-19 the company did not change its forecasts, however, if the strong trading continues then upgrades could come in the future.
On the back of this positive news, we see the insider buying here as a bullish signal. We see it as a company insider with a successful background taking a view that the market is undervaluing the stock at present.