If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster buying pattern at Danske Bank AS (DANSKE:DC). Danske Bank is a Danish multinational financial services company. It is the largest bank in Denmark and a major player in the European banking space, serving customers in eight countries. It’s listed on the OMX Nordic Exchange Copenhagen and currently has a market cap of around DKK 137.8 billion.
Cluster Buying Pattern
Our data shows that between July 21 and July 24, three insiders at Danske Bank bought stock. Those who bought shares were:
CEO Carsten Egeriis (6,025 shares @ DKK 165.55 per share)
Chairman Martin Blessing (3,000 shares @ DKK 165.22 per share)
Board member Jacob Dahl (6,208 shares @ DKK 160.95 per share)
Combined, the three insiders invested around DKK 2.5 million (approx. $371.2K) in the company.
Buying From Top-level Insiders
There are a couple of things that stand out here.
One is that several top-level insiders (the CEO and the Chairman) have purchased stock. Purchases from top-tier insiders are generally quite bullish as these insiders tend to have the most information on their companies.
Another thing that stands out is that the insiders have purchased stock near five-year highs. This suggests that the insiders expect operational performance to strengthen.
Return of the Dividend
Danske Bank recently published solid results for the first half of 2023.
For the half year, net profit came in at DKK 10.2 billion, up from DKK 4.5 billion a year earlier. Net interest income amounted to DKK 16.5 billion, up 45% year on year.
On the back of this strong performance, the company raised its full-year profit guidance. It now expects net profit of DKK 18.5 billion to 20.5 billion versus an earlier estimate of DKK 16.5 billion to 18.5 billion.
It also said that it would resume paying dividends to its shareholders. Last year, the bank paid no dividend due to a $2 billion settlement in the US and Denmark over a money-laundering scandal.
In light of the return of the dividend here, we see the insider buying as a bullish development.