INSIDER BAROMETER

Business Leaders Bulk up on Company Stock

StefanOschmann-Bloomberg
Stefan Oschmann, the new CEO of Merck, recently bought millions in his own company's shares, a vote of confidence that some analysts see as a sign the market may be turning.
  • Why it matters

    Why it matters

    After a rough start to 2016, one expert interprets the recent big transactions by executives as a signal of optimism for markets.

  • Facts

    Facts

    • New Bayer CEO Werner Baumann and other board members recently bought €1.7 million ($1.9 million) in their company’s stock.
    • Top people at Merck recently bought €1.2 million in shares at the pharmaceutical group.
    • The major shareholder of health-care group Rhön-Klinikum increased its holdings by more than 20 percent.
  • Audio

    Audio

  • Pdf

It’s quite the rarity: The past few weeks have seen three spectacular million-euro stock purchases by insiders at big German companies.

The votes of confidence – by top executives at Bayer and Merck and a major shareholder of health-care group Rhön-Klinikum – could be a sign that Germany’s struggling stock market might be on the mend after a rough start to the year.

“Such transactions are rare and a sign that members of management and supervisory boards see favorable investment opportunities in the stocks of their own companies,” said Olaf Stotz, a professor at Frankfurt School of Finance & Management.

What’s striking is that two of the recent transactions involved firms on the blue-chip DAX index of Germany’s 30 leading companies, an index which has fallen about 7 percent over the last six months, though it has recovered some of late. They also come at a time when many investors are wary of political developments in Europe that could push stocks down further.

Top executives, it seems, are trying to blow against the negative wind.

The amounts bought pale in comparison to the overall size of the stock market. But Mr. Stotz, who has studied such insider transactions for 13 years, interpreted the recent big transactions as good news for the markets overall.

“If you go by the insiders,” he said, “a marked decline in prices on the German stock market in the near future is rather unlikely — despite uncertainties, such as the vote later this month on the British staying in or leaving the European Union.”

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.