12-month performance: +116% Insider activity: Bullish Insider buying pattern: Purchases from multiple insiders including Chairman, CFO, and COO Recent news: Solid full-year results
Top-level company insiders such as CEOs, CFOs, and Chairmen tend to have the most up-to-date information on their companies. If they’re buying stock, it’s generally a bullish development.
In this article, we are going to highlight some top-level insider buying at Volex PLC (VLX: LN). Volex is a UK-based company that supplies power cords to a range of markets. The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalization of £289 million.
What has caught our attention here is a large purchase from Chairman Nat Rothschild. Regulatory filings show that the insider purchased 500,000 VLX shares on 25 August at a price of £1.65 per share. The total cost of the transaction was £825,000. This purchase follows smaller purchases from both the CFO (47,302 shares) and the COO (148,561 shares) earlier in August.
Source: 2iQ Research
Buying at higher prices
This insider buying activity looks interesting for a number of reasons. Firstly, Rothschild is the largest shareholder in the company. It’s likely that he has deep insight into the company’s operations. Thislarge purchase suggests that he is confident about the future.
Secondly, these insiders have bought at higher prices. This is generally a good sign as it indicates that the insiders continue to see value in the stock. Third, the insider buying in August represents the largest amount of insider buying within a quarter at Volex in several years.
Solid full-year results
Volex issued a solid set of full-year results in June. For the year ended 5 April 2020, revenue was up 5.2% while underlying diluted earnings per share were up 36.2%. The company said: “Volex is in a strong position and well placed to withstand any further downturns and maintain our dividend, whilst being able to pursue the opportunities that are presenting themselves and to create value for our shareholders.”
Putting this all together, we see the recent insider buying here as a bullish signal. Insiders clearly believe that the stock has the potential to climb higher.
Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.
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