Top-level insiders such as CEOs and Chairmen tend to have an excellent understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the business, and the share price, is attractive.
In this report, we are going to highlight a case of legal insider trading by CEO at Reposal SA (REP:SM). Repsol is an energy company that is headquartered in Madrid, Spain. The company has an integrated business model that ranges from oil and gas exploration and production to the commercialization of energy solutions for the home and mobility. It is listed on the Madrid Stock Exchange and currently has a market capitalization of approximately €19.54 billion.
Insider Buying at Repsol
Our data shows that on November 30, Repsol CEO Josu Jon Imaz purchased 10,000 shares at a price of €14.70 per share. This trade cost the insider €147,000 and increased his holding to 610,769 shares.
Mr. Imaz has considerable company experience. He joined Repsol back in 2008 as Chairman of its subsidiary Petronor and was appointed as CEO in April 2014. Under his leadership, the company has accelerated its focus on new energies with the aim of leading the energy transition. Given his experience, he is likely to have a good understanding of Repsol’s prospects.
It’s worth noting that Mr. Imaz has bought stock on several occasions throughout 2022. Our records show that he has made five purchases over the course of the year, boosting his holding by around 16%. In total, he has invested about €856,000 in Repsol stock in 2022, which suggests that he is confident the stock is set to move higher.
Repsol has a lot of momentum at present.
For Q3, the company posted EBITDA and adjusted net income of €2,844 million and €1,477 million respectively. These figures were up from €1,951 million and €623 million a year earlier.
Cash generation has been particularly strong recently. In Q3, cash flow from operations was €3,189 million, €1,750 million higher than in the same period of 2021. This allowed the group to pay down debt significantly. It ended Q3 with net debt of €2,181 million versus €5,031 million at the end of the second quarter of 2022.
As a result of the strong momentum, Repsol advised in its Q3 results that it plans to increase its dividend by 11% in 2023. It also announced another share buyback and said that it would bring forward its share buyback and redemption target for the entire 2021-2025 period by three years.
“Our ambition is to lead the energy transition. This pioneering agreement allows us to maintain the strategic direction of the upstream unit and, at the same time, to boost the transformation of the company and its multi-energy profile to achieve zero net emissions by 2050," said Mr. Imaz.
In light of the momentum the company has right now, we see the insider trades here as a bullish development.