Top-level company executives such as CEOs tend to have the most up-to-date information on their companies. If these insiders are buying stock, it’s generally a bullish development.
In this report, we are going to flag some substantial insider buying at Wendel SE (MF:FP). Wendel is a French investment company that partners with ambitious entrepreneurs. It invests for the long term as the majority or lead shareholder mainly in unlisted companies that are leaders in their markets. The company is listed on the Euronext Paris and currently has a market capitalization of €4.5 billion.
Wendel: Insider Buying
Our records show that in mid-January, Wendel’s Deputy CEO David Darmon purchased stock twice. On 13 January, the insider purchased 7,000 shares at a price of €100.30. Then, on 14 January, he added another 8,000 shares at a price of €101.01 per share. In total, Darmon spent just over €1.5 million on company stock.
This insider buying is worth highlighting for two reasons. Firstly, these are large purchases, both in monetary terms and relative terms. Our data shows that these purchases – which are the largest insider purchases at Wendel in a single quarter for several years – have boosted Darmon’s holding by 67%. This indicates that the insider is very confident that the stock is set to move higher.
Secondly, Darman has significant company experience. The insider joined Wendel in 2005 and has managed numerous investments for the group since then. In 2013, he opened the New York office (Wendel North America) and he has since invested more than $1 billion in the US. Given his experience, he is likely to have a good read on the company’s near-term prospects.
Wendel posted an encouraging set of third-quarter results in November. While consolidated nine-month sales were down 9.1% overall due to Covid-19 disruptions, the value of the company’s assets were up 12.0% on the value as of 30 June 2020. Meanwhile, the company advised that its financial structure was strong, with total liquidity of approximately €1.9 billion as of 30 September 30 including €1,148 million cash.
Looking ahead, the company said that it would be continuing to reposition itself for exposure to growth and that it would be opportunistically resuming share buybacks.
Since that update, analysts at HSBC have raised their target price from €112 to €123 – approximately 23% above the current share price.
In light of these developments, we see the insider buying here as bullish.