One of the most bullish signals in insider transaction analysis is ‘cluster buying.’ This is where three or more insiders at the same organization are purchasing company stock simultaneously.
In this report, we are going to highlight a cluster buying pattern at Fortis Inc (FTS:CN). Fortis is a Canadian gas and electricity company that operates in Canada, the US, and the Caribbean. In total, it has over three million customers. The company is listed on the Toronto Stock Exchange and the New York Stock Exchange and currently has a market cap of CAD 25.6 billion.
Insider buying at Fortis
Our data shows that between November 2 and November 3, three insiders at Fortis bought company stock. Those purchased shares were:
- President and CEO David Hutchens (19,000 shares @ USD $39.10 per share)
- Chief Legal Officer James Reid (2,400 shares @ CAD $52.89 per share)
- SVP, Capital Markets and Business Development Stuart Lochray (6,000 shares @ CAD $52.90 per share)
Combined, the three insiders invested around CAD $1.1 million in stock.
All of these insiders are likely to have a good understanding of Fortis’ investment potential.
Mr. Hutchens has more than 25 years of experience in the energy sector, having held a variety of positions at Fortis and its subsidiaries before being appointed President and CEO at the start of 2021.
Mr. Reid joined Fortis in 2018 and was appointed to his current role in 2022. Previously, he was previously a partner with Davies Ward Phillips & Vineberg LLP in Toronto. Prior to joining Fortis, he had a long relationship with the company, advising on corporate governance matters, large capital market transactions, regulatory applications, and mergers and acquisitions in both Canada and the US.
Mr. Lochray has an investment background. Most recently, he served as Managing Director and Head US Corporate and Investment Banking of Scotiabank in Houston, Texas. Earlier in his career, he served as Managing Director in various other areas of investment banking with a focus on the power and utilities sector.
6% dividend increase
Fortis recently posted a solid set of Q3 results.
For the period, net earnings were $326 million, or $0.68 per common share, up from $295 million, or $0.63 per common share a year earlier. Meanwhile, adjusted net earnings per common share were $0.71, up from $0.64 in Q3 2021.
On the back of these solid results, the company increased its fourth quarter common share dividend by approximately 6%, marking 49 years of consecutive increases.
Fortis also took the opportunity to announce its 2023-2027 capital plan in the Q3 results. This is expected to increase its mid-year rate base from $34.0 billion in 2022 to $46.1 billion by 2027, translating into a five-year compound annual growth rate of 6.2%.
The company believes the long-term growth in the rate base will drive earnings higher and support dividend growth over time. Looking ahead, it expects dividend growth of 4-6% annually through 2027.
In light of these results, we see the insider buying here as a bullish indicator.