2iQ Insider Brief: Cibus Nordic Real Estate AB (CIBUS: SS)United Internet AG (UTDI: GR)Econocom Group (ECONB: BB)

Kaloyan Kolev 9 October 2019

Cibus Nordic Real Estate AB (CIBUS: SS)

 12-month performance: +32%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors
Recent news: Good half-year results

Cibus Nordic Real Estate is a Swedish real estate company that acquires, develops and manages properties across the Nordic countries. The group currently owns more than 100 properties, with many let out to reputable grocery chains. The stock is listed on the OMX Nordic Exchange Stockholm and currently has a market capitalisation of SEK 4,430 million.

Cibus Nordic Real Estate shares have had an excellent run so far this year, rising nearly 40% on the back of a number of positive updates. Recently, the group advised that for the three-month period between April and June, rental income amounted to €12.6 million, an 8% increase on the same period last year, while net operating income totalled €11.5 million, an increase of 3% on last year.

CIBUS_SSSource: 2iQ Research

Analysing insider transaction activity at Cibus Nordic Real Estate, we think the stock could be set to continue rising. We say this because since early July we have observed a number of insider purchases, including three large purchases from investment company Hereditas, where Cibus Chairman Patrick Gylling sits on the board, as well as purchases from Cibus CFO Christina Olofsson and board member Johanna Skogestig, who both have significant experience in the Swedish real estate industry. Given this bullish pattern of insider buying, we think the stock offers an attractive risk/reward proposition at present.

 

United Internet AG (UTDI: GR)

 12-month performance: -10%
Insider activity: Bullish
Buying pattern: Large purchase from CEO
Recent news: Trimmed profit guidance

United Internet is a German internet service provider. Founded in 1988, the group has grown to become a leading European internet specialist with around 61 million customer accounts across 12 countries. The stock is listed on the XETRA and currently has a market capitalisation of €6.8 billion.

 

United Internet shares have underperformed this year on the back of concerns that the group and its subsidiaries will not be able to recoup their investments in 5G networks. In mid-August, both United Internet and its subsidiary 1&1 Drillisch trimmed their profit guidance to account for the initial costs of a planned 5G network, with United reducing its EBITDA guidance for the full year by a percentage point to 11%.

 UTDI_GR

Source: 2iQ Research

What we think is interesting about United Internet is that CEO and major shareholder Ralph Dommermuth – who has been CEO since 1988 when he founded 1&1 Marketing GmbH – purchased 500,000 shares in United Internet on 2 October at a share price of €32.40, spending a total of €16.2 million on stock. This is undoubtedly a sizeable purchase, which suggests that the billionaire insider is confident about the future. Given that a company’s CEO often has more insight into that company’s prospects than anyone else, we think United Internet shares could be worth a closer look right now given the size of the insider’s purchase.

 

Econocom Group (ECONB: BB)

 12-month performance: -16%
Insider activity: Bearish
Selling pattern: Selling from multiple directors
Recent news: Debt increase

Econocom is a Belgian company that specialises in helping businesses with digital transformation. Operating in 18 countries, the group offers a broad range of products and solutions that are designed to help companies become more agile and competitive. The stock is listed on the Euronext - Brussels and currently has a market capitalisation of €560 million.

 

Econocom shares have underperformed over the last six months, falling from around €2.75 to €2.26. One potential reason for this underperformance is that the company’s debt has increased significantly this year – at 30 June it stood at €405 million, up from €252 million at 31 December 2018. With equity standing at €451 million at 30 June, the debt-to-equity ratio here is now a relatively high 0.90, which may be deterring investors in the current economic environment.

ECONB_BBSource: 2iQ Research

Analysing insider transaction activity, we think Econocom Group shares are best avoided. This is due to the fact that since late September we have observed a substantial amount of selling activity from two insiders – Group Executive Director Bruno Grossi and Non-Executive Director Jean-Philippe Roesch. These two directors have sold nearly €700,000 worth of shares as the share price has continued to decline which does not look good, in our view. It’s also worth pointing out that directors were selling a substantial amount of shares early last year, right before the group issued a profit warning. Given this bearish signal, we think there’s risk to the downside here.

Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.

Getting the most of Insider Trading Data - Free Book

Download
ebook-sample