Insiders have access to real-time information on their companies and often also have a wealth of experience that can help them evaluate their firms’ prospects. If they are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at GBG (GBG:LN). GBG is a UK-based technology company that focuses on identity management. A global operator, the group helps businesses quickly validate and verify the identity and location of their customers with solutions that make use of machine learning, facial recognition, and other cutting-edge technologies. The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £848 million.
Insider Buying at GBG
2iQ data shows that on February 21, GBG’s Chairman Richard Longdon purchased 29,876 shares at a price of £3.33 per share. This trade cost the insider just under £100,000.
Mr. Longdon – who was appointed Chairman in September 2022 – has considerable experience in the tech sector. Previously, he spent 33 years at industrial software company AVEVA Group where he was CEO for 17 years. He has also served as Chair of RegTech firm Ideagen, held board positions at FinTech companies Alfa Financial and Fidessa, and worked with tech companies in the private markets. Given his background, he is likely to have a good understanding of GBG’s prospects. This is his first purchase since becoming Chairman.
Buying the Dip
GBG shares recently fell after the company posted a below-par trading update.
In the update, the company advised that it expects revenue of about £279 million for the year ending March 31, 2023 (FY2023). This was below analysts' expectations of £290.2 million. The company blamed challenging macro conditions in North America – which have led to longer sales cycles – for the poor performance.
Management expects performance to improve in the not-too-distant future, however. In FY2023, organic constant currency revenue growth is expected to improve gradually throughout the period from current levels towards high single-digits in the latter part of the year. And strong cost control is anticipated to sustain profit margins, without compromising ongoing investment in the business to support growth.
“GBG's services remain crucial for customers to operate safely and efficiently in an ever more digital world and the Board remains confident in the long-term opportunities," commented CEO Chris Clark.
The buying from the Chairman here suggests that he believes the stock will bounce back. We see the insider buying as a bullish development.