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Nothing reassures an investor quite as much as an insider buying amid a sell-off, especially when the ASX 200 stock plunges 30% in less than six months. If they can see a reason to buy, maybe there’s still a point in sticking with it.
Shares in Eagers Automotive Ltd (ASX: APE) have hit a couple of speed bumps this year. At the end of Thursday’s trading, the automotive retailer traded at $10.13 per share — within sneezing distance of its recently set 52-week low of $9.87.
However, shareholders may find solace in a rich lister’s seemingly insatiable appetite for Eagers.
Billionaire not stopping ’til he gets enough
While others might be losing hope, Nick Politis — Eagers’ non-executive director and Sydney Roosters chair — is reaching deep into his pockets.
According to today’s ASX notice, Politis feathered his nest by buying another 100,000 shares in the ASX 200 company. The buy was filled through an on-market trade on Tuesday, giving the wealthy businessman a grand sum of 72,819,048 pieces of the Eagers Automotive pie.
However, this is not Politis’ first time pulling out the chequebook in May. As my colleague Sebastian Bowen noted last week, the board member made two earlier purchases this month. The first purchase occurred on 9 May, nabbing 50,000 shares. The second investment captured 200,000 shares on 22 May.
The non-executive director’s stake is now worth $734.74 million.
Politis is visibly undeterred by the disclosure of profit-squeezing factors in Eagers’ recent trading update.
Perhaps the rich-lister sees it as a symptom of the economy and not a problem with the company itself. After all, fellow ASX-listed Peter Warren Automotive Holdings Ltd (ASX: PWR) described similarly difficult conditions in a release six days later.
Is this ASX 200 stock a misplaced buy?
Politis, and no doubt other buyers of Eagers, are likely banking on better times beyond the short term. If they’re right, the current share price could look like a decent deal.
However, Eagers Automotive still trades at a forward premium to some of its peers. For example, Peter Warren Automotive, Autosports Group Ltd (ASX: ASG), and MotoCycle Holdings (ASX: MTO) all trade at a 20% to 38% forward discount relative to Eagers.
Maybe being the biggest demands a premium over its competitors.
Nevertheless, Politis appears to be in it for the long haul, holding a 27% stake.