CFO stock purchases can be very informative insider transactions. CFOs have an in-depth understanding of their firms’ finances, and some studies have found that these insiders earn higher profits following their purchases of company shares than CEOs.
In this report, we are going to highlight a large CFO purchase at Univar Solutions Inc(UNVR:US). Univar is a global chemical and ingredient distributor. Leveraging over 90 years of experience, it offers value-added services, next-generation digital tools, technical assistance, and specialized market expertise to companies capitalize on growth opportunities. It’s listed on the New York Stock Exchange and currently has a market cap of $4.66 billion.
Insider buying at Univar Solutions
Our data shows that on August 10, Univar’s CFO Nicholas Alexos purchased 25,000 shares at a price of $26.19 per share. This trade cost the insider approximately $655,000 and increased his holding to 375,000 shares.
Private equity experience
This trading activity is worth flagging for a couple of reasons.
Firstly, Mr. Alexos has a background in investment management. Previously, he served as a Managing Director of Madison Dearborn Partners, LLC, a Chicago-based private equity investment firm focused on buyout and growth equity investing. Here, he helped a wide array of portfolio companies achieve growth and margin expansion.
Secondly, Mr. Alexos is not the only insider at Univar to buy shares recently. On August 4, Chairman Christoper Pappas – who has considerable experience in the chemicals industry – picked up 4,000 shares at a price of $25.68 per share. Our Insider Model views this insider buying pattern as bullish.
Univar recently posted a strong set of Q2 results.
For the period, the company reported net sales of $3.0 billion, an increase of 26% on a reported basis and 30.2% on a constant currency basis on the prior-year second quarter. This sales growth was the result of pricing discipline in inflationary markets and market share gains. Meanwhile, adjusted net income came in at $169.3 million compared to $97.4 million in the prior-year second quarter.
On the back of these results, the company raised its guidance for the full year. It now expects full-year adjusted EBITDA of between $1,040 million to $1,080 million, as compared to $797.7 million for full-year 2021. It also returned $81 million of capital to shareholders during the second quarter via share repurchases.
Looking to the future, management was confident that the company can continue to deliver. “Looking forward, we remain focused on the execution of our strategy and delivering market share growth both organically and inorganically. We are confident in our ability to capitalize on evolving global trends as we leverage our asset base, extensive private transportation fleet, digital capabilities, and long-standing commitment to our ESG goals," said President and CEO David Jukes.
In light of these strong results, and the increase to guidance, we see the insider buying here as a bullish indicator.