An insider is close to the nerve center of a company’s operations and they are often privy to real-time information that allows them to make well informed investment decisions. If an insider is buying company stock, it is often a positive development.
Here, we are going to highlight an insider purchase at 888 Holdings (888:LN). 888 is a gaming company that is headquartered in Gibraltar where its gaming licences are granted. The company, which owns a number of gambling brands and websites, is active in the areas of online casino, sports betting, poker, and bingo. It’s traded on the London Stock Exchange and currently has a market capitalization of £1.55 billion.
888 Holdings: Insider Buying
Regulatory filings show that on 9 September, the Chairman of the Board at 888, Jonathan Mendelsohn, purchased 24,000 888 shares at a price of £3.91 per share. This purchase cost the insider approximately £85,000 and increased his holding by around 100%.
Experienced Industry Expert
This insider transaction is interesting as Lord Mendelsohn has a wealth of experience within the gaming sector. Previously, he co-founded Oakvale Capital LLP, an M&A boutique focused on the gaming, gambling and sports sectors.
As well as spending over 20 years within the gaming sector, he has also been involved in a number of other sectors. He is the Senior Advisor to Value Retail, which operate luxury outlet shopping villages. The Chairman of the Board invests in a number of early stage start-ups covering a number of sectors. His background suggests he is well placed to make informed investment decisions.
In doubling his stake in the business, Mendelsohn is indicating that he is confident that the shares have further to run. He made his initial purchase at a price similar to this, strengthening the signal to investors that the insider believes the shares are undervalued.
888 released very strong half-year results for the six months ended 30 June 2021.
Revenue came in at $528.4 million which was a record for the first half and a 39% increase on the $379.1 million achieved in H1 2020. Adjusted EBITDA also climbed 39% to $97.4 million and basic earnings per share came in 11% higher at 13.7 cents. This meant net cash was up 48% at $114.4 million. The group saw double digit B2C revenue growth in all its major regulated markets. Despite a tough Q4 comparative, the Board is confident that both revenue and EBITDA will be above its previous expectations.
"The strong momentum from 2020 continued into the first half of 2021, with growth driven primarily by regulated markets, where we believe ongoing market share gains continue to reflect our product-leadership strategy, highly effective data-driven marketing, and our excellent content. The Board remains confident that, with 888's advanced technology, products and diversification across markets, the Group remains well positioned to deliver further strategic progress during 2021 and beyond,” said Itai Pazner, CEO of 888.
After these results, analysts at Berenberg raised their price target for the stock from 470p to 600p.
Having seen these impressive results, combined with a quietly confident outlook statement, we see the recent insider buying as bullish. It suggests to us that a well-rounded industry insider believes that the shares remain undervalued and that the share price will continue to rise.