If multiple insiders are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster buy at Watches of Switzerland Group (WOSG:LN). Watches of Switzerland is a UK retailer that specializes in luxury watches. Operating through its own-branded Watches of Switzerland stores, as well as its Mappin and Webb, Mayors, and Goldsmiths stores, it sells watches from brands such as Rolex, Patek Philippe, Omega, and Tag Heuer. The company is listed on the London Stock Exchange and currently has a market capitalization of £1.7 billion.
Watches of Switzerland Group: Insider Buying
Our records show that on 1 April, four board members at Watches of Switzerland purchased stock. Those who bought shares were:
- Chairman Ian Carter (15,943 shares)
- Senior independent non-executive director Tea Colaianni (4,518 shares)
- Independent non-executive director Rosa Monckton (1,497 shares)
- Independent non-executive director Robert Moorhead (4,457 shares)
Combined, these insiders spent around £175,000 on stock.
This cluster buy is worth highlighting for a couple of reasons. Firstly, all of these insiders have significant experience in the retail / luxury industries. Ian Carter, for example, previously served on the board of Burberry Group for over a decade. Meanwhile, Rosa Monckton, has over 20 years of experience in luxury goods and helped set up Tiffany & Co in the UK. This experience means that these insiders are likely to have a good read on the industry and the company’s future prospects.
Secondly, our data shows that all of these purchases have increased the insiders’ holdings significantly. Mr. Carter’s purchase, for example, has increased the size of his position by 84%. This suggests that these insiders are confident the stock is set to move higher.
Solid Q3 Results
Watches of Switzerland’s third-quarter results, posted in February, were strong, despite the fact that stores were closed during the period due to Covid-19. For the three-month period ended 24 January, group revenue was up 6.6% at constant currency to £272.6 million, boosted by e-commerce sales (UK e-commerce sales were up 121% year on year). Meanwhile, US revenue was up 19.2% at constant currency for the period.
Looking ahead, Watches of Switzerland’s sales growth is likely to accelerate now that non-essential retail stores in the UK are open again. Many Britons have saved money during the recent lockdowns, and a large proportion of this money is likely to be spent on discretionary goods.
In light of this backdrop, we see the cluster buy here as a bullish signal.