2iQ Insider Brief: Bayer AG(BAYN GR) Taylor Wimpey(TW LN) Energize Holdings Inc (ENR US)

Kaloyan Kolev 13 December 2018

Bayer AG (BAYN: GR) 

12-month performance: -40%
Insider activity: Bullish
Buying pattern: Large purchases from multiple directors including CEO and CFO
Recent news: Announced new strategy and activist investor has taken a stake

 

Bayer AG is a German multinational pharmaceutical and life sciences company, headquartered in Leverkusen. The group operates across four key divisions, including pharmaceuticals, consumer health, crop science and animal health. The stock is listed on the XETRA and currently has a market capitalisation of €59.2 billion.

 

Bayer shares have performed poorly over the last 12 months. Sentiment has been impacted negatively by the group’s €6 billion rights issue earlier in the year, as well as concerns over litigation, as the company currently faces 9,000 lawsuits over a suspected cancer link to one of its US gardening products. Yet Bayer has recently announced a new strategy that will see it cut 12,000 jobs and sell its animal health division and a number of key brands, and it has also recently come to light that activist investor Elliott Management has taken a stake in the firm. With that in mind, could the stock have potential after a 37% year-to-date share price fall?

 BAYER

Source: 2iQ Research

Recent insider transaction activity at Bayer looks bullish, in our view, as we have observed buying activity from a number of top directors since the beginning of December. Those purchasing shares have included Chairman and CEO Werner Baumann, who bought 15,000 shares at a price of €66.25, CFO Wolfgang Nickl, who acquired an extra 2,000 shares at a price of €66.62, and Board of Management member Stefan Oelrich, who purchased 6,000 shares in the company at a price of €66.37. Given that these top-level insiders are taking advantage of the lower share price and boosting their holdings in the company, we think the shares have rebound potential.

Taylor Wimpey (TW/: LN) 

12-month performance: -31%
Insider activity: Bullish
Buying pattern: Large purchases from multiple directors including CEO and Chairman
Recent news: Brexit uncertainty

 

Taylor Wimpey is one of the largest residential property developers in the UK. The group offers a broad range of properties from one-bedroom apartments to six-bedroom detached houses, and last year, it built nearly 15,000 homes. Founded in 2007 from the merger of George Wimpey and Taylor Woodrow, the company now has 24 regional offices across the UK, and it also has operations in Spain. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £4.2 billion.

 

The UK housebuilding sector has come under pressure this year due to Brexit uncertainty and falling house prices. With little clarity as to how Brexit will play out and what might happen to the UK economy when Britain does leave Europe, investors have dumped housebuilding stocks, as the sector is seen as particularly vulnerable to an economic downturn. Consequently, shares in FTSE 100 housebuilder Taylor Wimpey have lost around a third of their value in less than 12 months. Yet with the stock’s P/E ratio having fallen to just 6.2, could the company offer value as a contrarian play given that demand for housing in the UK is still relatively robust?

 Taylor Wimpey

Source: 2iQ Research

Looking at recent insider transaction activity, we think the shares look interesting right now. We say this because in the last week, we have observed buying activity from a number of high-level directors, which we interpret as a bullish sign. Those buying have included CEO Peter Redfern, who spent approximately £1 million on shares, Chairman Kevin Beeston, who spent around £150,000 on stock, and Group Operations Director Jennie Daly, who made a smaller purchase worth £20,000. It’s likely that all three of these directors have strong insight into the group’s future prospects, so given these purchases, we think the shares could be oversold. 

 

Energizer Holdings Inc (ENR: US) 

12-month performance: -3%
Insider activity: Bullish
Buying pattern: Large purchases from multiple directors including CEO and Chairman
Recent news: News on Spectrum acquisition

 

Energizer Holdings is one of the world's largest manufacturers of batteries. Its product portfolio includes Energizer brand batteries as well as portable flashlights and lanterns. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $2.3 billion.

 

Shares in Energizer Holdings fell 24% in November, after the group provided an update on its pending $2 billion acquisition of Spectrum Brands’ battery and portable lighting business, and also announced that it had signed a second agreement with Spectrum to acquire its auto care brands, including Armor All and STP, for $1.25 billion. The market wasn’t impressed with this announcement, and the stock fell sharply from around $55 to $45. However, analysts at RBC recently raised their target price for the stock to $70, so could this share price dip have provided an attractive point?

 Energizer Holdings

Source: 2iQ Research

Analysing recent insider transaction activity, we think Energizer Holdings could be worth a closer look at current levels. This is due to the fact that in the last fortnight, we have observed buying activity from several key insiders, including CEO Alan Hoskins, and CFO Timothy Gorman, who both purchased 10,000 shares at around $46. Clearly, these top-level directors are confident about the future, given that they have both just spent nearly half a million dollars each on company shares. As such, we believe the share price drop may have created a buying opportunity.

 

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

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