Multiple Insiders at Essity Just Bought Stock After Strong Q1 Results

If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth investigating further. This buying pattern – which is known as cluster buying – is a particularly strong insider trading signal.

In this report, we are going to highlight a cluster buying pattern at Essity AB (ESSITYB:SS). Essity is a global hygiene and health company that is headquartered in Stockholm, Sweden. The group’s products, which are sold in around 150 countries worldwide, include tissue paper, baby care, feminine care, incontinence products, and wound care. The company is listed on the Stockholm Stock Exchange and currently has a market capitalization of around SEK 199.53 billion. 

Four Insiders Buy Stock

2iQ data shows that between April 27 and May 2, four insiders at Essity bought stock. Those who bought shares were:

• President and CEO Magnus Groth (12,000 shares @ SEK 307.49 per share)

• SVP Group Function Human Resources Anna Sävinger Aslund (2,550 shares @ SEK 305.20 per share)

• SVP Group Function Legal Affairs Mikael Schmidt (3,300 shares @ SEK 303.20 per share)

• President Health and Medical Ulrika Kolsrud (4,827 shares @ SEK 312 per share)

Combined, the insiders invested around SEK 6.97 million in the company.

Company Experience

All of these insiders have been at the company for a long time. Mr. Groth joined the company in 2011 while Ms. Sävinger Aslund, Mr. Schmidt and Ms. Kolsrud joined the company in 2001, 1992 and 1995 respectively. They are therefore likely to have a good understanding of the business and its prospects.

It’s worth noting that in March, CFO Fredrik Rystedt also bought stock. He picked up 7,000 shares at a price of SEK 279.52, investing around SEK 2 million in the company. Overall, sentiment towards the stock within the organization appears to be very bullish right now.

Better-than-expected Q1

Essity recently produced Q1 results that were above market expectations.

Helped by continued price increases and better product mix across all of its business areas, sales came in at SEK 42.9 billion, up 25% year on year, while adjusted EBITA amounted to SEK 4.36 billion, up 54% year on year and ahead of the consensus forecast of SEK 4.03 billion.

Adjusted return on capital employed for the period increased to 12.7% from 9.0% a year earlier.

“Essity’s sales and profitability performed positively in the first quarter, primarily due to attractive customer offerings and higher sales prices to compensate for the cost increase,” commented CEO Magnus Groth.

“We are working in a focused manner – through innovation, value-generating customer offerings, strong brands, efficiency improvements and sustainable, profitable growth – to achieve our target of an adjusted return on capital employed of more than 17% by 2025,” he added.

In light of these strong results, we see the insider buying here as a bullish development.