Here, I’m going to highlight two FTSE stocks that have seen large insider buys recently. Should I follow the insiders and buy these stocks for my own portfolio?

A £300k+ buy in the FTSE 100

First up, we have FTSE 100 stock London Stock Exchange Group (LSE: LSEG). Here, there was a large purchase from CEO David Schwimmer on 18 November. According to regulatory filings, the insider bought 5,000 LSEG shares at a price of £66.80 per share. This purchase cost around £334,000.

I see this buy as quite bullish. This year, LSEG shares have underperformed the FTSE 100 by a wide margin (-24% vs +10%). I’m not sure this underperformance is justified. Recent results for the third quarter of 2021 showed solid revenue growth of 7.6%. Meanwhile, the group said it’s making good progress on the integration of financial data company Refinitiv. After the recent share price pullback, the stock trades at just 22 times next year’s forecast earnings. That strikes me as quite low, given the group’s dominant market position.

It’s worth noting that Schwimmer, who has been CEO since 2018, has considerable experience in the financial services industry. Previously, he spent 20 years at Goldman Sachs in senior roles. So it’s fair to assume that he knows a bit about investing. 

Of course, there’s no guarantee the stock will rise from here. Sometimes, insiders get their timing horribly wrong when they buy shares in their own companies.

However, I’m encouraged Schwimmer’s purchase. All things considered, I’d be happy to buy LSEG shares for my own portfolio on the back of this trade.

A £250k buy in the FTSE 250

Another stock with a large insider purchase recently is FTSE 250 technology company Kainos (LSE: KNOS). Here, there was a large purchase from chairman Tom Burnet on 17 November. Regulatory filings show the insider picked up 13,865 shares at a price of £18.04 per share, increasing his holding to 28,253 shares. This trade cost around £250k.

I see this as another quite bullish buy. Kainos’ recent half-year report, posted on 15 November, showed that the company is still growing at a rapid rate. For the six months to 30 September, revenue was up 33% while software-as-a-service bookings were up 118%. However, the market didn’t like the fact that earnings growth was weak and the share price fell. That’s when Burnet stepped up to buy.

I’ll point out that even after the recent share price pullback here, Kainos still has a high valuation. Currently, its forward-looking P/E ratio is about 48. That valuation adds a bit of risk to the investment case. However, Burnet seems to be comfortable with that valuation. The fact that he dropped £250k on shares (and nearly doubled the size of his holding) suggests that he’s confident about the future and expects the stock to rise from here.

Would I buy Kainos for my own portfolio today? Yes. This is one of my favourite UK tech companies. I expect it to get much bigger in the years ahead as businesses undergo digital transformation.

The post 2 FTSE shares with insider buying appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares of London Stock Exchange Group. The Motley Fool UK has recommended Kainos. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Here, I’m going to highlight two FTSE 100 stocks that have seen large insider buys in the last few weeks. Should I buy these shares for my portfolio on the back of this activity?

FTSE 100 insider buying

First up, we have alcoholic drinks giant Diageo (LSE: DGE). Here, there was a large purchase from chairman Javier Ferrán on 23 September. He purchased 25,000 shares at a price of £35.25 per share, spending a total of £881,250 on DGE stock.

In hindsight, this purchase was timed well because only a week after the trade, Diageo posted an encouraging trading update which noted it had made a “strong start to fiscal 22.” The company said its North American business was performing strongly and that it expects its organic operating margin to benefit from a further recovery in sales volumes.

Would I buy Diageo shares for my portfolio today? Yes, I would. In my view, Diageo is a high-quality business and I expect it to do well as the world reopens in the years ahead.

It’s worth noting that Diageo does trade at a higher valuation. Currently, the FTSE 100 stock has a forward-looking price-to-earnings (P/E) ratio of about 27. This adds some risk to the investment case.

However, I’m comfortable with the valuation. Since the company’s latest trading update, analysts at Credit Suisse have raised their target price from £39.50 to £42.00, which implies upside of nearly 20%.

Insiders spent millions here

Another FTSE 100 stock that’s seen some big buying recently is private equity and infrastructure investment group 3i (LSE: III). On 20 September, Peter Wirtz, co-head of Private Equity, purchased 75,000 shares at a price of £12.69 per share, spending £951,615 on stock. Meanwhile, between 27-29 September, Pieter de Jong, co-head of Private Equity, purchased 100,000 shares at an average price of £12.77 per share, spending £1,277,000 on stock.

This insider activity’s very interesting, in my view. Both Wirtz and de Jong are expert investors. The fact they’ve spent such large sums on stock suggests they’re pretty confident the share price is set to rise.

It’s worth noting that, recently, 3i released a trading update in which it said its investment portfolios have continued to make good progress this financial year. It noted it’s seen a “strong performance” in the significant majority of its investments.

Would I buy this FTSE 100 stock for my portfolio today? Looking at the business, I’d be comfortable taking a small position here. I expect the private equity and infrastructure markets to do well in the years ahead and I think 3i looks well-placed to benefit. The valuation is very undemanding (forward P/E of just 5.2) so I think there’s upside potential.

One risk to consider here is volatility. 3i’s revenues and profits can flux and this is reflected in the share price, which can also be turbulent at times.

I think the overall risk/reward skew here is attractive however.

The post 2 FTSE 100 stocks with insider buying appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares of Diageo. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

A defence specialist

One FTSE 100 company with recent insider buying is BAE Systems (LSE: BA). In this case, the Chairman Roger Carr recently bought £200,000 of the stock at 493p per share. While the share price has risen to around 535p since, the Chairman of a company buying such a significant amount of stock is clearly a very bullish sign, even if it had not risen.

But this is not the sole reason why I would invest in this UK share. For example, the recent half-year trading update was very positive, and the firm stated that it expects a “good second half to the year”. In fact, operating profits were £808m, which was only a decline of 10% from the year before. Sales also reached £9.9bn, and this was a 4% rise on the year. These results demonstrate how BAE has managed to cope well during the pandemic.

It also announced an interim dividend of 9.4p, which will be payable in November “assuming that there are no major additional or unforeseen pandemic-related disruptions”. With a yield of over 4%, this firmly cements BAE as one of my favourite UK shares. I’d buy without any hesitation today.

An up and coming UK share

A winner from the pandemic has been the online wine retailer Naked Wines (LSE: WINE). In fact, the firm has managed to deliver sales growth of around 76% for the first four months of its trading year, and there was 115% growth in the number of new customers.

Its share price has been a major beneficiary of the demand, with it rising by 107% since January. But this has not deterred COO Nicholas Devlin from buying more. In fact, he recently bought £20,000 worth of stock at 456p each. This demonstrates hope that the share price will continue to rise, as the UK share continues to benefit from increased demand.

In this case, I’m less convinced. While Naked Wines is a very strong business, the share price has already grown significantly. Consequently, I believe upside is limited because I can’t see demand remaining this strong for long. I’m therefore not following Devlin into buying this UK share, and believe there are better opportunities on the market.

The post With insider buying recently, would I buy these UK shares? appeared first on The Twelfth Magpie.

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Stuart Blair owns shares in BAE Systems. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Quite often, insiders time their trades very well. For example, back in early March, I noted insiders at Reckitt Benckiser were buying heavily around the 5,500p-6,000p level. Since then, the FTSE 100 stock has climbed up to around 7,500p on the back of strong results.

Today, I’ll highlight two FTSE 350 shares that have recently seen some insider buying. Are these stocks worth buying on the back of this insider transaction activity?

Bullish insider buying at this FTSE 100 company

One FTSE 100 stock that’s seen some insider buying recently is defence giant BAE Systems (LSE: BA). According to regulatory filings, on 31 July, Lady Stephanie Carr – the wife of BAE chairman Sir Roger Carr – purchased 40,546 BAE shares at a price of 493p. The total cost of the purchase was approximately £200,000.

In my view, this insider purchase looks quite interesting. For a start, the chairman’s likely to have a very good understanding of the business and its prospects. Secondly, this was their largest insider purchase in a number of years (and the first since 2017).

In addition, the insider purchase came after the FTSE 100 company issued a relatively encouraging set of half-year results in which it declared a dividend and said that it expects a “good second half to the year.”

All things considered, I see this insider purchase as a bullish signal. With the stock trading on a low P/E ratio of just 12, I see it as a ‘buy’.

easyJet shares: a substantial insider purchase 

Turning to the FTSE 250, there has also been some interesting insider buying at budget airline easyJet (LSE: EZJ) recently. According to regulatory filings, on 4 August, deputy chairman Charles Gurassa bought 90,241 easyJet shares at a price of 554p per share. The total cost of the trade was £499,935.

This trade stands out to me for several reasons. Firstly, at just under half a million pounds, it’s a substantial trade. And this purchase has boosted Gurassa’s holding significantly. Before this buy, he owned 18,198 easyJet shares. Now, he owns 108,439 shares. This suggests he’s confident the share price is going to rise.

Secondly, Gurassa has plenty of industry experience. Not only has he served as easyJet’s deputy chairman since 2011, but he has also served as CEO of Thomson Travel Group, executive chairman of TUI Northern Europe, and director of Passenger and Cargo at British Airways. It’s likely he knows the airline industry well.

Given the size of this trade and Gurassa’s experience, I think this insider purchase is quite bullish. That said, given the enormous amount of uncertainty associated with Covid-19, I wouldn’t rush to buy easyJet shares right now. Given the challenges the airlines face in the near term, I think there are better stocks to buy at present.

The post Director dealings: insiders have been buying these FTSE shares. Should you buy too? appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Reckitt Benckiser and BAE Systems. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.