Three Insiders at Albemarle Just Bought Stock

If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth taking a closer look. 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 Albemarle Corp (ALB:US). Albemarle is a specialty chemicals company that is focused on ingredients for mobility, energy, connectivity, and health. The world’s largest lithium producer, it has operations in a range of countries including the US, Chile, China, and Australia. It is listed on the New York Stock Exchange and currently has a market cap of $23.94 billion. 

Insider Buying at Albemarle 

2iQ’s data shows that between May 5 and May 10, three insiders at Albemarle bought stock. Those who bought shares were:

• Chairman, President, and CEO Kent Masters (5,470 shares @ $181.64 per share)

• President, Albemarle Energy Storage Eric Norris (1,260 shares @ $195.49 per share)

• Executive Vice President, General Counsel Kristin Coleman (1,373 shares @ $182 per share)

Combined, these insiders spent around $1.50 million on stock. 

Top-level Insiders 

What stands out here is that several top-level insiders have purchased stock. 

The large purchase from Mr. Masters – who has served as Chairman, President, and CEO since April 2020 – is certainly interesting as he is likely to have an excellent understanding of the company’s prospects. 

However, the trade from Mr. Norris also looks interesting. Mr. Norris joined Albemarle in January 2018 as Chief Strategy Officer and in this role was responsible for the company’s strategic planning, M&A, and corporate business development programs. In August 2018, he was appointed President of the Lithium global business unit, which became the Energy Storage global business unit earlier this year. 

Chile’s Lithium Plans 

Albemarle shares recently fell after Chile announced plans to nationalize its lithium industry. Chile plans to shift to a model where the state holds a controlling interest in all new lithium projects through a public company that partners with private mining firms. 

However, in the company’s recent Q1 earnings call, Mr. Masters said that the Chilean government has repeatedly stressed that Albemarle’s contracts will be honored through 2043. And the company is planning to build lithium plants in other countries to diversify its operations. 

As for Albemarle’s earnings, these showed that the company is performing relatively well right now. For the period, net sales were up 129% year on year to $2.6 billion while net income was up 389% to $1.2 billion. 

It’s worth noting that the company did lower its annual guidance to reflect the softer lithium market. It now expects net sales to increase 35% to 55% year over year. However, management was confident about the long-term story. 

“We see strong sales volume growth for the rest of the year but have modified our guidance to reflect softening lithium market pricing. We remain confident in the underlying market strength of our world-class asset base and our long-term growth strategy,” said Mr. Masters. 

In light of this confidence from management, we see the insider buying here as a bullish development.