Newly-listed FTSE Stock Dowlais Group Sees a Cluster of Insider Buys

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 Dowlais Group PLC (DWL:LN). Dowlais is a UK-based engineering company that is focused on the automotive sector. The company – which was spun off from Melrose Industries and came to the market in April 2023 – is listed on the London Stock Exchange and currently has a market cap of around £1.72 billion. 

Cluster Buying

Our data shows that between June 20 and June 29, five insiders at Dowlais Group purchased stock. Those who bought shares were:

• CEO Liam Butterworth (410,548 shares @ £1.21 per share)

• CFO Roberto Fioroni (164,218 shares @ £1.21 per share)

• Chairman Simon MacKenzie Smith (82,108 shares @ £1.21 per share)

• Board member Alexandra Innes (19,964 shares @ £1.24 per share)

• Board member Philip Harrison (8,258 shares @ 1.20 per share)

Combined, the insiders invested around £829,539 in the company. 

Value on Offer?

It’s interesting to see five insiders buy stock now, only months after the company was listed on the London Stock Exchange. This suggests that those within the company see a lot of value in the stock at present.

The large purchase from CEO Liam Butterworth is particularly interesting. He has considerable experience in the automotive industry having previously worked at Lucas Industries, FCI Automotive, Delphi Automotive, Delphi Technologies, and GKN Automotive. The fact that he has upped his stake by nearly 40% is notable.

Solid Update

Dowlais Group recently published an encouraging trading statement.

In the update, the group advised that for the four-month period to April 30, it generated adjusted revenue of £1.9 billion, up 9% year on year. It noted that adjusted operating margins in the period were in line with those delivered in full year 2022 and that cash conversion remained strong.

Looking ahead, management said that it was growing more confident of achieving adjusted operating margin expansion for the full year. It added that bookings were healthy, with the majority relating to BEV platforms, underlining its strong market position as the transition to electrification continues.

"We have had a very encouraging start to the year. As markets continue to recover, we are increasingly confident of delivering sector leading financial performance, based on our proven financial model and continued execution of our restructuring programs. We remain excited about the future," commented Mr. Butterworth.

In light of this trading update, and the fact that the stock trades on a P/E ratio of just eight at present, we see the insider buying here as a bullish development.