CEOs have deeper insight into their own companies’ operations than any outside analysts or fund managers could ever hope to obtain. If these insiders are buying company stock, investors should take note.
Here, we are going to highlight some interesting insider buying at Wiit SpA (WIIT:IM). Wiit is an Italian provider of IT services that helps medium-sized and large-scale businesses with cloud, cybersecurity, and business continuity solutions. It is listed on the Borsa Italiana and currently has a market capitalization of €423 million.
Wiit: Insider buying
Our records show that, so far this month, CEO Alessandro Cozzi has purchased stock three times. On 4 January, the insider acquired 753 shares at a price of €165.16 per share. Then, on 6 January, he purchased another 300 shares at a price of €164.00 per share. These purchases come after the insider sold a large number of put options on the stock in September and October last year. Investors sell puts on stocks they would like to own and believe are currently undervalued.
This insider buying activity is significant because Cozzi is the founder and majority shareholder of Wiit Group. Early in the 2000s, he launched the company with the goal of creating an all-Italian high-level player in the outsourcing business and he has guided its growth up to now. This means that he is likely to have an excellent understanding of the business, and its future growth prospects. The fact that he made several purchases already this month suggests that he is confident about the future.
Strong Q3 resultsWiit posted an excellent set of third-quarter results in November. For the nine months to 30 September, adjusted consolidated revenues were €34.8 million, up by 47.3% on the same period last year, driven by organic growth, a focus on higher added-value services, increasing cross-selling on customers of acquirees, consolidation of acquirees, and a continually expanding cloud services market.
Meanwhile, consolidated adjusted EBITDA was €12.4 million, up 30.3% on the same period in 2019, thanks to the concentration on cloud services, the degree of optimisation of process and operating services organisation, cost synergies, and the ongoing improvement in the margin of acquirees.
The company said that given the recurring nature of its revenues, it expected no significant repercussions from Covid-19 on the 2020 operating and financial performance. It also advised that it was very satisfied with the acquisition of MyLoc – which marks its first step expanding outside Italy – in terms of both growth and cost synergies.
On the back of this update, we see the insider buying here as bullish.