One thing I always keep an eye on as part of my research is director dealing (corporate insiders buying and selling shares in their own companies). Company insiders have an information advantage over the rest of us. If they’re buying or selling company stock, we can potentially gain valuable investment insights.
Here, I’m going to highlight three UK shares that have seen insider buying activity over the last month. Should I follow these insiders and buy shares in these companies for my own portfolio?
Let’s start with Accesso Technology (LSE:ACSO), which provides virtual queuing and online ticketing solutions to amusement parks and venues. It saw buying from three insiders, including the CEO and chairman, between 23-25 March. Combined, they spent over £250,000 on stock.
I think this activity looks interesting due to the fact it’s a ‘cluster buy’ – where multiple insiders have bought stock within a short space of time. This pattern is generally quite bullish because it shows there’s a consensus of opinion within the company that the stock’s undervalued.
With the global economy shortly set to reopen (and many consumers cashed up), I think this stock could potentially move higher. Having said that, it’s not a buy for me personally. Growth has been a bit inconsistent in recent years and the group is expected to make a large loss this year. Additionally, the company’s return on capital employed (a measure of profitability) has been quite low in the past. I think there are probably safer reopening stocks I could buy.
Another UK stock that’s seen recent director dealing is Clarkson (LSE: CKN). It provides integrated shipping services including broking and support services. Regulatory filings show that the wife of chairman Sir Bill Thomas purchased 3,631 shares at a price of £27.40 per share on 30 March. This was worth about £100,000. This purchase increased the size of their holding by 175%. Since then, board member Heike Truol has also purchased 1,607 shares, spending about £45k on stock.
This is another stock that looks interesting in the current macro environment. The global economy is picking up speed right now, and this means shipping activity is likely to increase. Recently, the company said the medium-term macro environment for shipping is favourable as demand/supply dynamics are set to improve, post Covid-19.
Would I buy the stock though? Probably not. It’s a bit too cyclical for me. In 2019, for example, the company generated a net loss of £12.8m.
Finally, there’s CVS Group (LSE: CVSG). It’s a leading provider of veterinary services. Here, chairman Richard Connell spent around £90,000 on stock on 6 April, purchasing 5,000 shares.
This stock does look quite tempting. The pet healthcare market is growing at a healthy rate and companies such as CVS are benefitting. Its recent half-year results, for example, showed an 11% increase in revenue and a 37% rise in earnings per share for the six months to 31 December.
However, I do have some concerns about this stock. One is that the company is yet to resume paying dividends after cancelling the payout during Covid. Another is the stock sports a P/E ratio of about 30, which adds risk.
Weighing everything up, I think there are better growth stocks I could buy right now.
Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Accesso Technology. 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.