Top-level insiders such as CEOs and Chairmen tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the business, and the share price, is attractive.
In this report, we are going to highlight some interesting buying from top-level insiders at Big Yellow Group PLC (BYG:LN). Big Yellow is a UK-based self-storage company. The group, which has the most recognized brand name in the UK self-storage industry, operates from a platform of 106 stores, including 24 stores branded as Armadillo Self Storage. It is listed on the London Stock Exchange and currently has a market capitalization of £1.9 billion.
Insider buying at Big Yellow Group
Our data shows that since September 20, three insiders at Big Yellow have purchased stock. We have listed those who have bought stock below:
- CEO Jim Gibson
- Chairman Nicholas Vetch
- Director Michael Kane O'Donnell
Combined, the three insiders have invested around £770,000 in Big Yellow stock.
There are unlikely to be many people who know Big Yellow better than these two individuals. Mr. Vetch was a co-founder of the company in September 1998, and held the position of CEO until July 2003, when he became Executive Chairman. Meanwhile, Mr. Gibson – the other co-founder of the company – has served as CEO since July 2003 after originally serving as Finance Director. So, these two are the definition of top-level insiders. The fact that both are now adding to their positions is very interesting, in our view. It’s worth noting that their trades represent the first insider purchases since March 2018.
Share price fall
Big Yellow’s share price has taken a big hit since mid-August, falling from over 1,400p to near 1,000p. Concerns over interest rate increases from the Bank of England, and the state of the UK economy, have been the main drivers of the share price weakness.
Is a fall of that magnitude justified? Possibly not. Recently, Big Yellow signed a $225 million credit approved shelf facility with Pricoa Private Capital and this should provide it with flexibility to navigate the challenging environment going forward. In a trading update posted in July, management said:
“The new Pricoa shelf facility gives us the flexibility to put in place additional medium to long term debt at moments of our choosing, whilst substantially reducing refinancing risk. Our business model and secure capital structure give us the confidence to continue to invest in our business and seek opportunities to grow our platform."
It’s worth pointing out that for the quarter ended June 30, Big Yellow achieved like-for-like closing net rent per sq ft of £32.35, up 12% year on year. It also delivered a 9% increase in like-for-like store revenue for the period.
In light of these numbers, and the confidence from management, we see the insider buying here as a bullish indicator.