Every so often, I like to take a look to see which shares have experienced meaningful insider buying. This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.
A number of shares have reported meaningful insider recently. Here are a couple which have caught my eye:
Breville Group Ltd (ASX: BRG)
According to a change of director’s interest notice, the Chairman of this appliance manufacturer has been topping up his position.
The notice reveals that Steven Fisher bought 1,221 shares via an on-market trade on 29 April. The Chairman paid a total of $32,119.14 for the shares, which equates to an average of $26.30 per share. This purchase lifted Mr Fisher’s holding to a total of 130,000 Breville shares.
With the Breville share price now trading at $25.83, investors have the opportunity to invest at an even cheaper price.
Analysts at UBS certainly think this would be a good idea. This morning the broker retained its buy rating and $35.70 price target on the company’s shares.
Based on the current Breville share price, this price target represents potential upside of 38% over the next 12 months.
Metcash Limited (ASX: MTS)
Another change of director’s interest notice reveals that one of this wholesale distributor’s new directors has already been buying shares. According to the notice, Margaret Haseltine bought 57,839 Metcash shares within just a few days of her appointment to the board.
The release advises that Ms Haseltine snapped up the shares through on-market trades between 4 May and 5 May for an average of ~$3.46 per share. This represents a total consideration of $199,784.90.
One broker that would be supportive of this purchase is Morgan Stanley. In March the broker put an overweight rating and $4.20 price target on the company’s shares.
So, with the Metcash share price currently trading at Ms Haseltine’s buy price of $3.46, this implies potential upside of 21% over the next 12 months.