When an ASX 200 stock dives 15% in one trading session, the best thing that its ragged investors might hope to see is a senior member of said stock's management going out and putting their money where their mouth is by buying up significant chunks of shares.
Not only does this shore up investor confidence, but it can also let investors know that their shares aren't worth selling. In fact, it might even persuade some that they are too cheap not to pick up some more.
That's exactly the scenario that investors in ASX 200 car dealership stock Eagers Automotive Ltd (ASX: APE) are presented with today – the bad and the good.
The bad first. As we covered on Wednesday, Eagers stock did tank by 15.01% over that day's session, falling from $12.19 a share down to $10.36. It was worse at one point on Wednesday as well, with the company minting a new 52-week low of $9.87 during intra-day trading.
The catalyst for this steep fall was the year-to-date trading update Eagers released that day.
Director buys up big after ASX 200 stock tanks on earnings update
As we discussed at the time, this update warned investors that the company is expecting to endure a 15% drop in profits for the first half of 2024 compared with the first half of 2023.
Needless to say, the markets were not impressed with this ASX 200 stock.
Yet some of the shareholders that were selling out on Wednesday were handing over their shares to none other than Eagers non-executive director Nicholas Politis.
Politis appears to have taken Warren Buffett's famous advice about being greedy when others are fearful.
An ASX filing from Wednesday reveals that Politis picked up no fewer than 200,000 shares in on-market trades during Wednesday's session. Politis paid an average of $10.403 for one tranche of 100,000 shares and an average of $10.537 for the other 100,000. All up, that would have set this ASX 200 stock's director back around $2.09 million.
After these enthusiastic buys, Politis now owns 72,719,049 Eagers shares, which would have a value of just over $770 million at the current share price (at the time of writing) of $10.59.
No doubt Eagers investors will appreciate this strong vote of confidence from this board member this week.
Eagers share price snapshot
Even before this week's Eagers share price nosedive, this ASX 200 stock had been on struggle street for a while. As it stands today, Eagers shares are now down 27.1% over 2024 to date, as well as by 17.7% over the past 12 months.
At today's share price, this ASX 200 stock is trading on a price-to-earnings (P/E) ratio of 9.59, with a trailing dividend yield of 6.99%.
