2iQ Insider Brief: Bilia AB (BILIA:SS) Heroux-Devtek Inc (HRX:CN) Aqua America Inc (WTR:US)

Robert Hable 22 November 2018
Bilia AB (BILIA:SS)

12-month performance: +12%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Solid Q3 results

Bilia AB is one of Europe’s largest car dealership chains. The group is engaged in the sale and servicing of passenger cars and transport vehicles, and also offers supplementary services such as financing and insurance. It currently has 130 facilities across Sweden, Norway, Germany, Luxembourg and Belgium as well as online auction sites in Sweden and Norway. The stock is listed on the Stockholm Stock Exchange and currently has a market capitalisation of SEK 8.3 billion.

We last looked at Bilia on 19 September when the shares were trading at around SEK 72. At the time, multiple directors were purchasing shares in the company after the group had just reported its highest-ever operational earnings for a quarter. We noted in our Insider Brief that, with multiple directors acquiring shares in Bilia (including Chairman and prominent Swedish financier Mats Qviberg), the stock looked interesting.

Fast forward to today, and Bilia shares are now trading at SEK 83, having traded as high as SEK 88 earlier this month. That means that any investors that followed Bilia directors and purchased shares in the company in September could have potentially generated a capital gain of 22% in less than two months – an excellent result given the recent market weakness across global equity markets.

BILIA-SS-1

Source: 2iQ Research

Is it too late to purchase Bilia shares now? Possibly not, looking at recent insider transaction activity. In the last two weeks, three more directors have been acquiring shares in the company, including President/CEO Per Avander, Deputy CEO Stefan Nordstroem, and CFO Kristina Franzen. We view these director purchases as a bullish signal, and as such, believe there could be more upside to come from Bilia shares.

Heroux-Devtek Inc (HRX:CN)

12-month performance: -10%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Key acquisition and solid Q2 results

Heroux-Devtek is a Canadian company that specialises in the design, development, manufacture and repair of landing gear, actuation systems, and components for the aerospace market. The company is the third-largest landing gear company in the world, supplying both the commercial and the military sectors with landing gear systems and components. The stock is listed on the Toronto Stock Exchange and currently has a market capitalisation of CAD $479 million.

Heroux-Devtek shares have fallen from CAD $16 to CAD $13 recently, mainly due to general market weakness. Yet since the beginning of October, the group has reported solid Q2 results (adjusted EBITDA rose 9.5%) and also successfully completed the acquisition of Airbus SE subsidiary Compañia Española de Sistemas Aeronáuticos – its largest acquisition ever – for a purchase price of €137 million, which will enable the group to increase its market presence in Europe. Could the recent share price pull back have provided an attractive entry point?

HRX-CN

Source: 2iQ Research

Analysing recent insider transaction at Heroux-Devtek, the outlook for the shares looks favourable, in our view. We say this because, since the shares have fallen to around CAD $13 recently, six key insiders have purchased stock, including President/CEO Gilles Labbe (40,000 shares), CFO Stephane Arsenault (7,000 shares) and COO Martin Brassard (8,000 shares), which we view as a bullish signal. Given that multiple top-level insiders are accumulating stock after the recent share price fall, we believe the shares could be set for a rebound.

Aqua America Inc (WTR:US) 

12-month performance: -8%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including President/CEO and CFO
Recent news: Acquisition of natural gas company

Aqua America is a water and wastewater utility company that services approximately three million people across eight states in the US. The group operates through two divisions including Aqua Resources, which provides water and wastewater services through contracts with municipal authorities, and Aqua Infrastructure, which provides non-utility raw water supply services for firms in the natural gas drilling industry. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $6 billion.

Aqua America shares have generated solid returns for investors over the last five years, rising approximately 40%. Yet a recent announcement that the group will acquire natural gas company Peoples in a $4.3 billion deal was not received well by investors, with the stock plummeting from $38 to $33 on the news. However, Aqua America management believes that the acquisition is a “great strategic fit” and that the transaction will be immediately accretive to earnings. With that in mind, could the recent share price fall have provided an attractive entry point?

WTR-US

Source: 2iQ Research

Looking at recent insider transaction activity, top-level management certainly appear to see value in the shares, as five key directors have purchased stock recently while the share price has been under $33. Those buying have included President/CEO Christopher Franklin, who spent $835,334 on shares, and CFO Daniel Schuller, who bought $100,528 worth of shares. We interpret this buying activity as a bullish signal, and, therefore, believe that the recent share price pullback is 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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