Insider Buying

M&G PLC insiders buy stock after gilt market-related sell-off

M&G PLC
(MNG:LN)
12 months:
-31.45%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including Chairman
News:
Gilt market volatility
M&G PLC
(MNG:LN)
12 months:
-31.45%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including Chairman
News:
Gilt market volatility
The image's background depicts old coins money, with the blog introduction mentioning the insiders upped their stack significantly on top.

Insider transactions 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 and its prospects than its executives and directors.

In this report, we are going to highlight some interesting insider buying at M&G PLC (MNG:LN). M&G is a UK-based savings and investment company that operates in nearly 30 markets. In total, it serves around 5.5 million retail customers and over 800 institutional clients. The company is listed on the London Stock Exchange and currently has a market cap of £4.2 billion.

Insider buying at M&G

Our data shows that several insiders at M&G have made large stock purchases this month.

On October 7, Chairman Edward Braham picked up 95,000 shares at a price of 167p per share. This trade cost the insider roughly £159,000. Then, on October 12, board member Massimo Tosato acquired 60,700 shares at a price of 164p per share. This trade cost the insider around £100,000.

It’s worth noting that New CEO Andrea Rossi has also made a large purchase this month, purchasing 175,000 shares at a price of 168p per share on October 7. However, this trade was most likely related to her contract.

Bullish activity

There are a couple of things that stand out here.

Firstly, Mr. Braham has increased the size of his holding significantly with his purchase. Previously, the Chairman owned 40,150 shares. However, after this purchase, he now owns 135,150 shares. The fact that the insider has boosted his holding by 237% suggests that he is very confident the stock is undervalued.

Secondly, Mr. Massimo – who boosted his stake by 28% – has more than 30 years of experience as an investment banking and asset management entrepreneur and senior manager. Previously, he was Chief Executive of Schroder Investment Management Limited. Given his background, he is likely to have a good understanding of M&G’s investment potential.

Share price fall

M&G shares have experienced weakness recently on the back of the carnage in the gilt market, falling from near 200p to 175p.

As a pension manager, M&G is likely to have considerable exposures to gilts, and the volatility in the gilt markets may have resulted in the need to stump up extra capital to meet margin calls on gilt derivative positions. So, there is some uncertainty here in relation to the company’s liquidity position. As a result, investors have moved out of the stock.

However, sell-side analysts generally agree that any liquidity shocks from the gilt market turbulence will be manageable for firms such as M&G. “We expect this to be manageable given their strong liquidity buffers,” said analysts at Moody’s. "We do not expect material solvency ratio implications,” wrote UBS analysts in a research note.

The buying activity from insiders here suggests that they believe M&G’s liquidity position is fine and that the recent share price fall has created a buying opportunity.

We see this insider buying as a bullish indicator.

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