Insider buying is the purchase of shares in a company by an officer or executive of that company, such as a director. Buys by multiple insiders can act as a stronger signal, as can larger, rather than smaller, share purchases. Depending on the circumstances, the purchase of shares by an insider can be seen as a vote of confidence in a business.
With that in mind, let’s take a look at four S&P/ASX 200 Index (INDEXASX: XJO) shares with multiple recent insider buys.
Computershare Limited (ASX: CPU)
Four Computershare directors acquired an aggregate of 79,330 shares in the company over the last fortnight. Computershare provides share registry and fund services as well as administering employee equity plans, stakeholder communications, corporate governance and most recently, mortgage servicing.
Computershare was trading at over $18 in early February but has fallen around 37% since and is currently trading at $11.41 at the time of writing. The company released its half-year results in mid-February, recording a small increase in revenue, however, earnings per share (EPS) dropped.
Computershare reported revenue of $1,141.7 million, up 1.2%, while earnings before interest, tax, depreciation and amortisation (EBITDA) increased 2.2% to $338.7 million. The first half result was impacted by lower corporate action activity levels, a higher effective tax rate, and US interest rate cuts which impacted margin income revenue. EPS declined by 16.7% to 29.12 cents.
With careful cost control, positive earnings growth is expected in the second half. Nonetheless, over the full-year, EPS is expected to decline by around 5%.
Link Administration Holdings Ltd (ASX: LNK)
Three Link Administration directors bought an aggregate of 335,000 shares in the company over the last week. Link Administration provides technology-enabled administration services for superannuation fund administration and corporate markets. The company also provides related services including data management analytics, digital communications, and stakeholder education and advice.
Link Administration shares traded as high as $6.81 at the end of January but have since fallen to $3.99 at the time of writing. Link released its half-year results at the end of February revealing a large drop in profits. Managing Director John McMurtrie said it was a transitional year for the company, which was reflected in the results. Nonetheless, McMurtrie said, “we are making good progress on our strategic plan and our medium to long term outlook remains strong.”
The company reported a 4% decline in revenue for the first half, which fell to $624 million. Recurring revenue was $522 million, representing 84% of total revenue. Operating EBITDA declined 11% to $163 million as the company faced headwinds in its Corporate Markets business in the UK. Statutory net profit after tax (NPAT) fell 84% to $29 million.
The company says its business units continue to display resilience and deliver sound underlying performance. A global transformation program is underway which is on track to deliver $50 million in annualised savings by the end of FY22.
Smartgroup Corporation Ltd (ASX: SIQ)
Three Smartgroup directors have acquired an aggregate of 91,456 shares in the company over the past fortnight. Smartgroup provides salary packaging and fleet management services to state and federal governments and corporate employers.
Shares in Smartgroup reached highs of over $12 in the second half of last year but have since receded and are currently trading at $5.59. Smartgroup released its full-year FY19 results in mid-February, revealing modest increases in revenue and profit.
Smartgroup reported a 3% increase in revenue which reached $249.8 million following consecutive years of growing customer numbers. EBITDA increased by 3% to $118.2 million and net profit after tax and amortisation (NPATA) increased 4% to $81 million. A final dividend of 21.5 cents per share was declared, up 0.5 cents from the prior corresponding period (pcp).
OZ Minerals Limited (ASX: OZL)
Three OZ Minerals directors acquired an aggregate of 46,000 shares in the company over the past fortnight. OZ Minerals is a mining company focused on copper and gold, and is based in South Australia. The company has operations in Australia and Brazil as well as a pipeline of earn-in opportunities.
OZ Minerals shares reached a high of $11.54 in December but have declined in the interim and are currently trading at $7.95. The company released its full-year results in February, reporting a decrease in revenues and profits flowing from lower gold and copper sales.
OZ Minerals reported gross revenue of $1,174 million down $17 million on the previous year. Lower copper sales were largely offset by higher realised gold and copper prices with the net AUD gold price 12% higher. Underlying EBITDA was $462 millionwith a strong margin of 42% resulting from consistent strong operating performance at Prominent Hill.
NPAT of $164 million was reported, lower than 2018, principally due to lower copper sales as Prominent Hill transitions from its higher copper grade open pit stockpiles. A fully franked final dividend of 15 cents per share was declared.
The cash balance declined to $134 million from $505.1 million in December 2018 following significant investment in Carrapateena and other growth activities. Ore stockpiles of $449 million will continue to be processed through to 2023, generating strong cash margins with open pit-related costs already incurred.
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Kate O'Brien owns shares of OZ Minerals Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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