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 Motley Fool UK.

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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 Motley Fool UK.

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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.

Recently, I’ve noticed some large insider buys at a FTSE 100 company. I see this director dealing as very encouraging. On the back of this insider activity, I’ve bought more shares in the company myself.

FTSE 100 director dealing

The FTSE 100 company I’m referring to is consumer goods champion Reckitt Benckiser (LSE: RB). It owns Dettol, Nurofen, Durex, and a host of other well-known brands.

This week, the company has announced two large director deals. On 20 November, Chairman Chris Sinclair purchased 3,700 shares, spending £248,600 on the stock. Then, on 25 November, CEO Laxman Narasimhan purchased 7,930 shares, spending £501,900.

Insiders appear to be confident

This director dealing looks bullish to me for a number of reasons.

Firstly, these are top-level insiders who have bought stock. They are likely to have an in-depth understanding of Reckitt’s recent performance. It’s fair to assume that they are going to be way ahead of analysts and fund managers.

Secondly, these are large purchases. Both insiders have increased their stakes in the company significantly. Narasimhan’s purchase of 7,930 shares, for example, has increased the size of his holding by 23%. Meanwhile, Sinclair’s purchase of 3,700 shares has increased his stake by 60%. This suggests that these insiders firmly believe the FTSE 100 stock is undervalued right now.

Finally, insiders at Reckitt Benckiser have timed their purchases well in the past. Back in March, a number of top-level insiders, including the CEO, purchased RB stock when it dropped below £60. In the next few months, the share price rose to around £80 on the back of strong results.

I’m bullish on Reckitt Benckiser

This director dealing is not the only thing I like about RB right now. There are other reasons I’m bullish on the FTSE 100 stock. 

One is that the company is benefiting from the increased focus on hygiene as a result of Covid-19. This is reflected in recent results, which have been excellent. Third-quarter results, for example, showed like-for-like sales growth of 13.3%. I expect hygiene to remain a focus across the world for years to come.

Secondly, City analysts are currently upgrading their earnings forecasts. Over the last month, the consensus earnings per share forecast for this year has risen from 318.8p to 325.2p. This is a positive development and it should support the share price.

I’ve bought more shares in this FTSE 100 firm

After rising to £80 in late July, Reckitt shares have pulled back to near £65 recently. Since the vaccine news, investors have dumped the stock.

I see a lot of value here after this pullback (and clearly so do the CEO and the Chairman). Earlier in the week, after the Chairman’s purchase, I topped up my holding.

With the forward-looking P/E ratio currently around 20, and a yield of about 2.7% on offer, I see this recession-proof FTSE 100 stock as a strong buy.

The post Insiders are buying this FTSE 100 stock. So am I appeared first on The Motley Fool UK.

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Edward Sheldon owns shares in Reckitt Benckiser. 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.