Top-level corporate insiders tend to have the most information on their companies. If these individuals are buying company stock, it can signal that the outlook for the stock is good.
In this report, we are going to highlight a large purchase from a top-level insider at XXL ASA (XXL:NO). XXL is a Norwegian retailer of sporting goods. Operating through 90 stores and an online platform, it sells sporting equipment, bicycles, clothing, pet gear, and wellbeing products. The company is listed on the Oslo Stock Exchange and currently has a market capitalization of NOK 5.75 billion.
XXL ASA: Insider Buying
Our records show that on 23 April, XXL’s Chairman Hugo Maurstad bought 500,000 shares at a price of NOK 19.24 per share. This purchase – which cost the insider NOK 9.6 million (approx $1.2 million) – increased the size of his holding by 100% to 1,000,000 shares.
This insider transaction is worth highlighting for two reasons. Firstly, it is a substantial trade both in nominal and relative terms. The fact that Maurstad has doubled the size of his holding suggests that he is confident XXL stock is set to rise.
Secondly, Maurstad is an experienced insider with a background in economics and private equity. Currently, he is a partner at Altor Equity Partners – a private equity firm focused on leveraged buyout and growth capital investments in Sweden, Denmark, Finland, Norway, and France – where he has worked since 2004. Through Altor, he has been responsible for several investments within sports and leisure. Before that, he was at McKinsey, where he led the Norway office. This background means that he is likely to know what he is doing.
XXL’s interim report for Q1 2021 showed that the company is turning things around after a challenging few years. For the quarter, EBIT came in at NOK 16 million versus NOK (215) million in Q1 2020, while cash provided by operating activities was NOK 230 million versus NOK 145 million in the same period last year. At the end of the period, the group had liquidity reserves of NOK 1,181 million versus NOK 774 million at the end of Q1 2020. This improvement in performance came despite the fact that many stores were closed during the period.
Looking ahead, XXL said that it is working on several strategic initiatives to increase operational efficiency. It believes that, over time, these should help increase market share, strengthen the e-commerce channel, and stabilize gross margins from current levels.
In light of these results, we see the insider buying from the Chairman here as bullish.