2iQ Insider Brief: IRBINVIT:IN, ALT:FP, SANT:GR

Robert Hable 19 October 2018

IRB Invit Fund (IRBINVIT:IN)

12-month performance: -18%
Insider activity: Bullish
Buying pattern: Multiple directors buying including CEO & CFO
Recent news: Solid Q1 performance

IRB Invit Fund is an infrastructure trust which is focused on investing in toll-road assets in India. It was the first ever infrastructure investment trust to be listed in India. The sponsor of the trust is IRB Infrastructure Developers Limited – one of the largest infrastructure development and construction companies in India in the roads and highways sector – and the trust’s portfolio includes six road projects across a number of Indian states. The fund is listed on the National Stock Exchange of India and currently has a market capitalization of approximately USD $580 million.

IRB Invit Fund made its debut on the National Stock Exchange of India in May 2017 at a price of INR 102. However, despite the fact its IPO was oversubscribed 8.57 times (institutional interest was even higher and oversubscribed 10.81 times), the stock has fallen significantly since launch and currently trades for INR 74. When you consider that the Indian NIFTY 50 index has risen by around 9% since IRB Invit Fund listed on the market, this is certainly a disappointing performance. Could the fund now offer long-term value though?

IRB Performance

Source: 2iQ Research

Insider transaction activity here paints a bullish picture. Since mid-September, we have seen significant buying activity from a large number of top-level directors, including CEO Vinod Menon and CFO Tushar Kawedia, who have both been buying stock at around the INR 75 level. In total, 20 separate insider purchases were registered in September, followed by another eight in October so far. We interpret this kind of ‘cluster buying’ as a bullish signal as it suggests management is confident about the future. As such, we think the fund is worth watching for a turnaround.

Altran Technologies SA (ALT:FP)

12-month performance: -49%
Insider activity: Bullish
Buying pattern: Multiple directors buying including CEO
Recent news: Discovered an incident related to key acquisition

Altran Technologies is a French engineering consultancy firm that focuses on providing its clients with transformation and innovation solutions. Providing expertise across a range of industries, including aerospace, defense, energy, finance, life sciences, and telecommunications, the group has 45,000 employees in over 30 countries and generated revenues of €2.9 billion last year. The stock is listed on the Euronext Paris and currently has a market capitalization of €1.8 billion.

Altran shares fell sharply on 12 July after the group announced that it had identified an ‘incident’ with Aricent its recent USD $2 billion acquisition – related to forged purchase orders. Although the company advised that it did not expect a material impact on its H1 financial statements as a result of the incident, the market did not take the announcement well, with the stock falling 30%. The announcement was no doubt a significant setback for the group, especially when you consider that the stock had been under pressure since the deal was announced last November, with analysts raising concerns over the size of the deal. With uncertainty surrounding Altran, is it a stock best left alone?

Altran Performance

Source: 2iQ Research

Analysis of insider transaction activity here actually reveals a bullish outlook. Since mid-September, we have seen four separate insider purchases from three top-level directors, including a €199,245 purchase from CEO Dominique Cerutti. We believe this purchase from Cerutti is worth noting, in particular, as the CEO has a long-term trading IQ of 114, indicating that he has an excellent track record of timing his purchases well. With that in mind, we think Altran could have the potential for a rebound once the company regains investors’ trust.

S&T AG (SANT:GR)

12-month performance: 7%
Insider activity: Bullish
Buying pattern: Purchases from CEO & CFO 
Recent news: Merger with Kontron

S&T AG is an Austrian supplier of IT solutions that has a particular focus on Industry 4.0, embedded computer systems and Internet of Things (IoT) technology. Operating across Germany, Austria, Switzerland, Eastern Europe and North America, the group has over 4,000 employees working for its subsidiaries. The stock is listed on the Frankfurt Stock Exchange and currently has a market capitalization of €1.3 billion.

After a strong three-month run between mid-June and mid-September in which the stock rose from around €20 to above €27, S&T has fallen sharply in the last few weeks and is now trading back near €20. Given that there has been no news regarding the stock in this time, it looks as though this recent sell-off may simply be a result of general stock market weakness and the technology sell-off we have seen in the US this month. As such, could now be a good time to invest in the company?

S&T Performance

Source: 2iQ Research

Looking at recent insider transaction activity, it appears that at least two top-level directors see value in S&T shares at current levels and they are CEO Hannes Niederhauser and CFO Richard Neuwirth. Both insiders recently purchased stock on 8 October, with Niederhauser buying 20,000 shares at €22.49 and Neuwirth buying 5,000 shares at €22.30. Given that a company’s CEO and CFO often have the most detailed knowledge of that company’s prospects, we believe S&T is a stock worth monitoring closely. 

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