Insider buying and selling can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more information in relation to a company’s prospects than its executives and directors.
In this report, we are going to highlight some recent insider buying at Fevertree Drinks PLC (FEVR:LN). Fevertree is a British beverages company that produces premium drink mixers. The company sells its product in a range of markets including the UK, the US, Europe, and Australia. It is listed on the London Stock Exchange and currently has a market cap of £1.24 billion.
Director Dealing at Fevertree Drinks
Our insider transaction data shows that on July 15 and July 18, three insiders at Fevertree snapped up stock. Those who bought shares were:
- Co-Founder and CEO Tim Warrillow (115,000 shares @ £8.71 per share)
- Chairman Bill Ronald (11,416 shares @ £8.72 per share)
- Board member Jeff Popkin (15,208 shares @ $10.45 per share)
- Board member Kevin Havelock (30,816 shares @ £9.19 per share)
Combined, these insiders spent around £1.3 million on stock.
This trading activity is worth highlighting as it’s a clear ‘cluster buying’ pattern. Cluster buying is where three or more insiders at the same company are buying stock simultaneously. This is typically a bullish signal.
What’s more, two of the insiders here are top-level insiders. Mr. Warrillow co-founded the company in 2004 and has served as CEO for over a decade. Meanwhile, Mr. Ronald has served as Chairman since June 2013. Both of these insiders are likely to know the company very well. It’s also worth noting that board member Jeff Popkin has 30 years experience in the beverages industry so is likely to have a good read on the business too.
Share Price Crash
Fevertree’s share price crashed on July 15 after the company posted a profit warning.
In a HY pre-close trading update, the group advised that it now expects full-year operating profit to be in the range of £37.5 million to £45 million, down from an earlier forecast of between £63 million and £66 million. The company blamed labor shortages, logistical issues, and higher glass costs for the lower level of profitability.
Fevertree did say, however, that consumer demand remains strong. It added that it was focused on driving a number of initiatives to prioritize availability whilst also mitigating the ongoing impact of the current logistics and cost headwinds.
“Despite the current challenges of the volatile logistical and cost environment, we continue to make good progress across our regions. The strong and growing consumer demand for the brand, our exciting pipeline of innovation, and the growing interest in long-mixed drinks, gives us more confidence than ever in the long-term opportunity," commented Mr. Warrillow.
The buying from the three insiders here suggests that they have confidence in the long-term story and that they expect the stock to bounce back. We see this buying pattern as a bullish indicator.