One thing I always keep an eye on as part of my investment research is insider buying (or ‘director dealing’). Insiders are some of the most informed participants in the market and their trades can provide us with valuable insights. Like the rest of us, insiders buy a stock for one key reason – they expect to make money.
Recently, I’ve noticed some interesting insider buying at Accesso Technology (LSE: ACSO). This is an under-the-radar UK company that specialises in virtual queuing and online ticketing solutions for amusement parks and other similar attractions. Is this director dealing an indicator that I should buy Accesso Technology shares? Let’s take a closer look.
Director dealing in Accesso Technology shares
Regulatory filings show that in late March, three insiders at Accesso Technology purchased shares.
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On 23 March, CEO Steve Brown bought 13,000 at a price of £5.75 per share. Then, on 25 March, non-executive director Andy Malpass picked up 18,000 at a price of £5.75. Finally, on 26 March, Chairman Bill Russell acquired 13,000 shares at a price of £5.80 each.
Combined, these insiders spent just over £250k on Accesso Technology shares in the space of a few days.
Bullish insider buying
I think this director dealing is quite bullish when I consider that the global economy is about to reopen and there’s a lot of pent-up demand from consumers to visit theme parks, fairs, festivals, zoos, sports arenas, and other similar attractions.
It’s worth noting that in the company’s recent full-year 2020 results, posted on 23 March, management was quite optimistic about the future after a challenging year last year.
“With vaccination programmes underway in our key geographies, we feel confident of a progression to more normal trading conditions in 2021. With the strength of our technology offering, solid relationships, and an amplified focus on technology by venue operators, we are well-set to re-embark on our growth journey,” said CEO Steve Brown.
“We now have a growth-ready foundation on which to address substantial pent-up demand as the pandemic recedes,” he added.
Given the insider buying and the confident tone from management, I think the stock looks interesting right now from a ‘reopening play’ perspective.
My concerns
That said, I do have some concerns about investing in Accesso Technology shares.
One is that the company was experiencing some challenges before Covid-19. In 2019, for example, revenue was below guidance due to lower-than-anticipated new customer wins and adjusted basic earnings per share were down 54% year on year. So, this isn’t a company with a perfect growth track record.
Secondly, return on capital employed (a key measure of profitability) was quite low before Covid-19. In 2018, it was 2.4% while in 2017 it was 4.4%. So, unlike some of my favourite UK growth stocks such as Softcat and dotDigital, this isn’t a company that’s highly profitable on a consistent basis.
Should I buy Accesso Technology shares?
Weighing everything up, I’m not convinced that Accesso Technology is a great fit for my portfolio at the moment. I like to invest in companies with consistent growth track records and Accesso’s track record is a bit patchy.
Having said that, I think the stock could potentially move higher from here as the world reopens post-Covid.
