Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger organizations, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight some interesting insider buying at a small US-listed company, Douglas Dynamics Inc (PLOW:US). Douglas Dynamics is a manufacturer of commercial work truck attachments and equipment that owns a range of trusted brands including Dejana, Henderson, and SnowEx. It is listed on the New York Stock Exchange and currently has a market cap of around $705.6 million.
Our data shows that on September 6, President and CEO Bob McCormick purchased 10,000 PLOW shares at a price of $30.71 per share. This trade cost the insider approximately $307,000.
Mr. McCormick has substantial company experience. Before being appointed President and CEO in January 2019, he was COO of the company from 2017 to 2019. Before this, he was CFO and Treasurer from 2004 to 2017. Given his experience, we think this large stock purchase is notable.
Douglas Dynamics recently produced strong Q2 results.
For the quarter, net sales came in at a record $207.3 million, up 10.5% year on year. Gross profit was $61.4 million, up 20%, while net income jumped 35% to $24 million.
“We produced improved results across virtually every metric this quarter when compared to last year, with our Attachments team performing better than expected, and our Solutions team delivering noteworthy improvements,” commented Mr. McCormick.
Looking ahead, management noted that demand for the company’s products remains strong. It also said that inflationary pressures are starting to ease.
“While supply chain constraints continue, demand for our products and services remains positive, we are still maintaining a near-record backlog,” said Mr. McCormick.
In light of these solid results, we see the insider buying here as a bullish development.