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Insiders Active in CME Group (CME) Amid Surge in Trading Around Interest Rates, Ag

by | Nov 7, 2021

CME Group (CME) with a rare open market buy on 11/4 of 1,600 shares from the COB/CEO at $220.20, a more than $350K investment. This is the first buy in the name since June 2020 when a director bought $345K in stock at $178 and largest single purchase in over four years.  CME is working out of a big monthly bull flag above $220 with upside targets to $255 and $295. The $79.2B company trades 30.6X earnings, 17X sales, and 50.5X cash. CME is coming off a strong quarter with ADV up 5% Y/Y with 20%+ growth in Interest Rates and Agricultural products. CME sees a lot of potential for new products going forward across tools and services around data, micro-contract futures, and ESG-focused futures contracts. On 11/4, CME announced that Google had invested $1B in the company as part of a long-term Google Cloud deal.  The move will transition CME’s futures and options market over the cloud over the next decade and allow CME to use Google’s AI/machine learning and global reach to expand their fintech tools. Analysts have an average target for shares of $218 with a Street High $235. Piper positive on 10/1 noting that shares could see meaningful price appreciation into the end of 2021 given a confluence of environmental factors and recent underperformance driven by misguided headlines of a potential acquisition. The analyst says CME is a play on rising interest rates and volatility. Atlantic upgrading to Overweight on 9/14 citing anticipation of higher Treasury yields and inflationary expectations. Hedge fund ownership fell 4%. Senator Investment Group a buyer of 650K shares in a new position. Short interest is 1.3%. CME has seen mixed flows including buyers in the March $180 and March $190 calls.

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