Insiders at the top of a company have access to real-time information that allows them to make more-informed decisions than ordinary investors when trading their company’s stock. So, when an insider buys stock, it’s often worth taking a closer look.
Here, we are going to highlight an insider purchase at WEX Inc (WEX:US). WEX is a financial services technology provider that is focused on three main areas: Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions. Headquartered in the US, it provides services to corporate and government organizations globally. It’s traded on the New York Stock Exchange and currently has a market capitalization of $9.0 billion.
WEX Inc: Insider Buying
Form 4 filings show that on 1 June, a Director of WEX, James Groch, purchased 3,000 WEX shares at a price of $201.75 per share. This purchase cost the insider approximately $600,000 and increased his holding by over 100%.
This trade came to our attention because it is sizable in monetary terms and it has more than doubled the size of Groch’s holding. This suggests that the insider is very bullish on the company’s future prospects.
It’s worth noting that Groch is an investment professional. He has been an Executive at CBRE since 2009 and has been its Chief Investment Officer since 2019, ultimately responsible for the $100 billion plus assets under management at the company. This would suggest he is very well placed to assess the investment merits of WEX. Given his investment experience, we believe this purchase sends out a very positive signal to investors.
WEX was hit hard by the Covid-19 pandemic given its focus on fleet, employee benefits, and travel. However, the company’s Q1 results showed that the business is recovering. Revenues surpassed expectations and the net loss reduced to $2.6 million from $16.3 million a year prior. Importantly, the balance sheet and liquidity remained healthy.
Looking ahead, management was optimistic in relation to the company’s prospects for the rest of the year. “In the first quarter, we delivered strong momentum sequentially, exceeded our revenue expectations and achieved $16.8 billion of total purchase volume, driven by meaningful contributions in all segments. In aggregate, Fleet, Corporate Payments and Health are above pre-pandemic revenue levels. These solid results reflect a number of exciting new wins and renewals as well as a robust pipeline of opportunities that give me confidence in our ability to drive market share gains through the remainder of the year,” said Melissa Smith, WEX’s Chair and Chief Executive Officer.
On the back of the recovery at WEX and improving macro-economic factors, we see the recent insider trading at the company as bullish. The insider is an investment professional and this share purchase suggests that he strongly believes the shares are currently undervalued.