Insiders at small firms tend to earn the largest profits from their stock purchases. This is due to the fact that small-cap stocks are less researched than large-cap stocks, so there’s more potential for explosive moves to the upside.
In this report, we are going to highlight some insider buying at a small German company, Wallstreet:online AG (WSO1:GR). Wallstreet:online operates the finance websites wallstreet-online.de, boersenNews.de, FinanzNachrichten.de, and ARIVA.de. It’s also active in the financial technology (FinTech) space through its stake in Wallstreet:online capital AG, which operates Smartbroker – one of the largest bank-independent online discount investment brokers in Germany. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of $377 million.
Wallstreet:online: insider buying
This month, we have observed a number of interesting insider purchases at Wallstreet:online.
The first was a large purchase from Chairman of the Supervisory Board Andre Kolbinger on 16 June. Kolbinger bought 15,427 shares at a price of €26.34, spending €406,000 on stock.
The second was a purchase from Supervisory Board member Marcus Seidel on 17 June. Seidel bought 2,000 shares at a price of €25.00 per share, spending €50,000 on stock.
Additionally, these two insiders, along with CFO Roland Nicklaus, bought stock in the company’s recent share placing on 15 June. The three insiders bought a total of 90,394 shares, spending €2.4 million on stock.
This insider trading activity stands out for a couple of reasons. Firstly, the insiders have spent a considerable amount of money on company stock. In total, Kolbinger, Seidel, and Nicklaus have spent nearly €3 million on Wallstreet:online stock this month. This indicates that they are very confident the stock is set to rise from here.
Secondly, those that have purchased stock are all top-level insiders. They are likely to have superior knowledge in relation to Wallstreet:online’s operating and financing activities.
Transition to a FinTech
Wallstreet:online is in the process of transforming itself into an online broker with an integrated financial community. The transformation appears to be working. In its first year, Smartbroker gained more than 80,000 customers, pushing group revenue up to €28 million – more than double revenue in 2019 (€12.3 million).
Looking ahead, the group expects Smartbroker to continue driving growth. This year, it expects the platform to achieve 120,000 new accounts, taking the total number of accounts to 200,000. It anticipates that this customer growth will drive revenues up to €45 million to €50 million for the year.
“With the combination of the Portal business on the one hand and the Online Brokerage on the other hand, we have created a unique business model, which works already perfectly well,” said CEO Matthias Hach recently.
“The Smartbroker is accepted by customers and achieves excellent results in market comparisons. We launched the right product at the right time. The number of new customers, which is well above our expectations, impressively confirms the strategic repositioning we have initiated," added CRO Stefan Zmojda.
Looking at the progress Wallstreet:online has made recently, we see the insider buying as a bullish signal. The company has momentum right now, and insiders clearly believe the stock has the potential to climb higher.