12-month performance: -39% Insider activity: Bullish Insider buying pattern: Purchase by CEO Recent news: The company recently reinstated the dividend
A CEO has the deepest insight into their own company’s operations. If a CEO is buying company stock, investors should take note.
In this article, we are going to analyze a CEO purchase at WPP PLC (WPP:LN). WPP plc is a media company with a global footprint. It plans and creates marketing campaigns and branding campaigns, designs adverts, and provides media buying services. WPP PLC is based in London and is listed on the London Stock Exchange with a market cap of £7.5 billion.
WPP: insider buying
Records show that CEO Mark Read recently upped his stake in WPP. On 24 September, the insider bought 85,000 shares at a price of £5.67 per share. The monetary value of the transaction was £481,950.
Source: 2iQ Research
This insider purchase is significant for two reasons. Firstly, it is a substantial purchase. It has increased the size of the CEO’s position by 29%. This suggests he is confident about the future.
Secondly, Read doesn’t purchase stock very often. This is his first purchase for over two years.
In its recent Q2 results, WPP reinstated its dividend. It also stated an intention to launch a share buyback scheme when market conditions allow. The Q2 results beat analyst expectations. The company said that Q2 is expected to be the toughest quarter of the year as long as there are no further lockdowns. The share price has rebounded since the Q2 results but with less companies offering a dividend, WPP will be attractive to funds looking for income. The share buyback will also help bolster investors’ confidence in the company.
In summary, we see the recent purchase of stock by the CEO as a significant bullish indicator. WPP plc has seen positive momentum in the share price post the promising Q2 update but the stock is still around 40% lower than where the shares traded a year ago. The CEO’s share purchase suggests he has a strong conviction that there is more upside in WPP’s share price to come.
Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.
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