If multiple insiders are buying company stock within a short period of time, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
Here, we are going to highlight cluster buying at Smart Metering Systems PLC (SMS:LN). Smart Metering Systems is a UK-based energy infrastructure company that owns, installs, and manages assets such as smart meters, battery energy storage systems, and EV charging points. It helps both companies and individuals optimize their energy usage, reducing their carbon footprint as well as their energy costs. It is traded on the London Stock Exchange’s AIM market and currently has a market capitalization of £996 million.
Insider buying at Smart Metering Systems
Our insider transaction data shows that on October 13, four insiders at Smart Metering Systems bought stock. Those who bought shares were:
CEO Timothy Mortlock (14,058 shares @ £7.11 per share)
CFO Gavin Urwin (2,153 shares @ £6.96 per share)
Chairman of the Board Miriam Greenwood (3,570 shares @ £7.02 per share)
Non-Executive Director Ruth Leak (2,825 shares @ £7.08 per share)
In total, the four insiders spent around £160,000 on Smart Metering Systems stock.
This insider buying is interesting for two reasons. Firstly, our data shows us this is the first time there has been cluster buying at the business in over two years. It is therefore significant that three high-ranking insiders have bought stock on the same day.
Secondly, CEO Timothy Mortlock has increased his holding by around 65%. Mr. Mortlock is likely to know the business extremely well. He joined Smart Metering Systems in 2014 when it acquired UPL. Before he took up the CEO position, he was Managing Director of the asset management, data, and energy management businesses. Overall, he has over 20 years of experience in the energy and utility industry.
Smart Metering Systems reported encouraging H1 results with many of its key metrics improving versus the year before.
Group revenue of £62.7 million was up 21% on last year. Meanwhile, EBITDA of £25.8 million was up an encouraging 15%. Basic EPS came in at 3.37p, up 274% on H1 2021.
As for the balance sheet, net cash at the end of the half was a very healthy £38.6 million. And the debt facility of £420 million was undrawn.
In the second quarter, smart meter installations moved above 40,000 per month. By contrast, average installations during the 2021 financial year were around 30,000 per month. At the end of the first half, the pipeline for contracted smart meters stood at around 2.42 million.
“The global energy market is in a period of extreme turbulence and there is a fundamental need for the CaRe assets we originate and own. These assets enable the transition to a low carbon, flexible, secure and, of particular importance at this time to all businesses and consumers, low cost energy system. We remain confident about the future growth prospects for the business,” said Mr. Mortlock.
After looking through these results, we are of the opinion that the recent insider buying at Smart Metering Systems is a bullish event.
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