2iQ Insider Brief: Davide Campari Spa(CPR IM) Brooks MacDonald Group(BRK LN) Horizon Discovery Group(HZD LN)

Kaloyan Kolev 10 April 2019

Davide Campari Spa (CPR: IM) 

12-month performance: +34%
Insider activity: Bullish
Buying pattern: Buying from multiple directors at higher prices
Recent news: Broker upgrades 

Davide Campari is an Italian company that operates in the alcoholic and non-alcoholic beverage industries. It produces spirits, wines and soft drinks, and key brands in its portfolio include Campari, Aperol, Wild Turkey, and SKYY Vodka. The stock is listed on the Borsa Italiana and currently has a market capitalisation of €10 billion.

 

Shares in Davide Campari have had an excellent run recently, driven by the increasing popularity of its largest brand Aperol. Over one year, the stock is up approximately 34%, while over five years, it has risen almost 180%. Yet despite this strong performance, brokers remain overwhelmingly bullish on the stock. For example, last month Goldman Sachs lifted its price target for CPR from €7.40 to €10, stating that it expects Aperol sales to grow at a rate of 26% per year between now and 2021, while Berenberg listed the stock as one of its preferred spirits names due to its superior organic top-line growth prospects. Deutsche Bank also recently said that Campari could potentially double its earnings in the next five years. Clearly, sentiment towards Campari is positive at the moment.  

 CAMPARI

Source: 2iQ Research

Looking at insider transaction activity, what we think is interesting about Campari shares is that two top-tier directors have made significant purchases recently. In early March, we observed a purchase worth around €75,000 from board member Karen Guerra, and then in late March and early April we observed two purchases from board member Eugenio Barcellona worth €350,000. The reason we find these purchases interesting is that both board members have bought at higher prices, and we see this as a bullish signal. It suggests that despite the recent share price rise, key insiders still see value in the stock. With brokers upgrading their price targets for Campari and key insiders buying significant amounts of shares, we think the outlook for the stock is favourable.

 

Brooks MacDonald Group (BRK: LN) 

12-month performance: -8%
Insider activity: Bullish
Buying pattern: Buying from multiple directors including CEO, Chairman and Finance Director
Recent news: Solid FY2018 results 

Brooks MacDonald is an independent investment management company based in the UK that offers specialised investment services to individuals, pension funds and institutions. Founded in 1991, the group has assets under management of around £12 billion today. The stock is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalisation of £236 million.

 

After a strong run between the start of 2009 and the middle of 2017 in which BRK shares rose from 250p to 2,500p – a gain of 900% – the shares have pulled back to the 1,700p level recently. Much of this correction appears to be the result of Brexit uncertainty, however, recent equity market volatility has not helped the stock. However, the group’s half-year results in March looked solid, with underlying profit before tax climbing 8% and underlying diluted EPS rising 12%. Management also hiked the interim dividend by 12%. With that in mind, could now be a good time to take a closer look at the stock after its recent pullback?

 Brooks MacDonald

Source: 2iQ Research

Examining insider transaction activity, we certainly think BRK shares look interesting right now. We say this because last week, five top-level directors purchased shares in the company, including the CEO, Finance Director and the new Chairman. Generally speaking, these insiders tend to know more about a company’s prospects than anyone else, so if they’re spending their own money on shares, it tells us that they expect the shares to rise. No doubt, Brexit adds uncertainty here, but with the group recently hiking its dividend by 12% and five key insiders buying, we think the risk/reward profile of the stock is attractive at present.  

 

Horizon Discovery Group (HZD: LN)

 12-month performance: +16%
Insider activity: Bullish
Buying pattern: Buying from multiple directors including CEO, CFO and Chairman
Recent news: Robust trading update 

Horizon Discovery Group is a UK-based life science company that specialises in gene editing technology. Its offerings are built around its proprietary translational genomics platform – a high-precision, flexible suite of gene editing tools that are able to alter almost any endogenous gene sequence in human or mammalian cells. The stock is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalisation of £238 million.

 

Despite the fact that Horizon Discovery Group is yet to make a profit, the company appears to have considerable potential due to its expertise in gene editing – an exciting niche technology that could one day potentially play a key role in eliminating genetic diseases such as Cystic fibrosis and Huntington's disease. The company also appears to be growing quite quickly, with management recently telling investors that it expects revenue for the year ended 31 December to be 61% higher than the year before.

 Horizon Discovery Group

Source: 2iQ Research

Looking at insider transaction activity at Horizon Discovery Group, we think the shares could be set to move higher. We say this because on 29 March, four key insiders purchased shares in the company – including the CEO, CFO and the Chairman – which we see as a bullish signal as these directors are likely to have an excellent understanding of the group’s future prospects. With the company recently telling investors that it is seeing “increasing interest and demand” for its products and unique scientific expertise, and multiple directors buying, we think the shares have upside potential.

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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