ASX 200 insider buys are often a source of bullishness in a company’s stock price. Many investors consider a director or executive buying interests in the company they head to be confident in the future of its operations.
Shares of automotive retailer Eagers Automotive Ltd (ASX: APE) have edged higher on Wednesday and opened the day more than 1% in the green. At the time of writing, the ASX 200 share is swapping hands at $10.44 apiece.
While there is no market-sensitive news for the company today, filings from Tuesday reveal that one ASX 200 insider has bought up shares in the auto retailer for the first time in eight years.
The buys could be a welcome relief, too. Eagers’ stock price has clipped more than 28% in the red this year to date, with a 15% drop in the last month alone.
ASX 200 insider buy details
Eagers revealed in mandatory filings on Tuesday that director Marcus Birrell bought 200,000 shares for $2.1 million consideration.
The purchases were made through 11 separate on-market transactions via Birrell’s investment vehicle, Birrell Investments Ltd, and were all executed on Monday this week. These latest ASX 200 insider buys increase Birrell’s shareholding to 2.2 million ordinary shares in the company.
Notably, Birrell’s last acquisition was in July 2016, shortly after Eagers completed its purchase of Birrell Motors earlier that year.
Eagers shares nudged higher on Tuesday, finishing 2% higher, with the buying strength continuing into the Wednesday morning session.
Other insider moves and market updates
This ASX 200 insider buy follows a trend among Eagers’ directors. Billionaire Nick Politis is a large shareholder via his entities WFM Motors Pty Ltd and NGP Investments. He has also recently increased his stake, The Australian reports.
Since 22 May, Politis has added 420,000 shares, investing a total of $4.5 million. This brings his position in the company to 72.9 million shares.
Perhaps spurring the ASX 200 insider buys is the recent performance of Eagers’ stock price.
In May, the company warned that it expected a sharp reduction in earnings this year. Management projected the company would produce earnings “approximately 85% of the underlying profit before tax for the first half of 2023”. In other words, a 15% year-over-year decline was expected for H1 FY 2024.
Still, many experts are focusing on the company’s fundamentals rather than the short-term movements in its stock price. Perhaps the latest ASX 200 insider buys reflect this sentiment, too.
Bell Potter rates Eagers a buy with a price target of $13.35 per share, which represents a 29% upside potential at the time of writing.
The broker anticipates dividends of 64.5 cents per share in FY 2024 and 73 cents per share in FY 2025 (both fully franked). These forecasts imply forward dividend yields of 6.1% and 7%, respectively.
Could ASX 200 insider buys instil confidence?
The recent ASX 200 insider buys in Eager Automotive stock could be interesting developments for the company’s share price.
Investors were optimistic about the share on Wednesday despite the lack of other market-sensitive news for the company.
In the last 12 months of trade, the Eagers share price has slipped more than 20% in the red and underperformed the S&P/ASX 200 Index (ASX: XJO) by nearly 26%.
The post This ASX 200 insider is buying up company shares for the first time in 8 years! appeared first on The Motley Fool Australia.
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Eagers Automotive Ltd. 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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