When management of a company buy shares of a company, it can pay to take notice.
Over the years we have seen plenty of reasons why leadership sell shares, but there’s only one reason why management buy shares, they think the share price is good value.
Wilson Asset Management (WAM) CEO Kate Thorley has just bought some shares of WAM Global Limited (ASX: WGB), she is also a director of WAM Global.
WAM Global is a listed investment company (LIC), its purpose is to invest in overseas businesses that WAM investment team believe are undervalued and will go higher in the not-too-distant future.
One of the attractive things about LICs is that we can buy them at discounts to their asset value, whereas exchange-traded funds (ETFs) are always bought at their underlying value.
Ms Thorley has bought shares at a number of times when the WAM Global share price was at an attractive discount to the net tangible assets (NTA) per share. In the past few months share she bought shares in June, September and at the start of this month.
Every month WAM Global tells the market when it’s net tangible assets (NTA) are. At the end of October 2019 it had a pre-tax NTA of $2.37 per share, so the share price of $2.20 is a 7.2% discount to that. Since the end of October the global share market, as measured by the MSCI World Index (AUD), has risen by another couple of percent.
What this means is essentially a double discount. We can buy WAM Global for materially cheaper than its assets, which the WAM Global investment team also think are undervalued. It owns a number of attractive shares like LVMH, Hasbro, CME Group, S&P Global and Logitech.
I think WAM Global is attractively priced, although it’s not as cheap as earlier in the year in discount to NTA terms. The payment of growing dividends will help as well. However, it does come with fairly high management fees, so that’s something to keep in mind.
The post An insider is buying shares of this cheap business appeared first on Motley Fool Australia.
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Motley Fool contributor Tristan Harrison owns shares of WAMGLOBAL FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019