When a company’s executives and board members voraciously buy their own stock suddenly, it’s worthy of attention.
Share purchases by insiders are often viewed as a vote of confidence in a company’s stock. People within an organization have first-hand knowledge of the company’s happenings and performance. Seeing them buy stock can be taken as a sign that the executives and board members feel that the share price is likely to rise in the future.
Conversely, whenever reports surface that company insiders are selling a stock, it signals to other shareholders that they should follow suit. Wall Street’s cottage industry tracks stock purchases and sales by company insiders, particularly after earnings season when share prices tend to move sharply higher or lower.
Outside investors are always looking for clues related to stocks, and insider buying and selling is seen as a reliable indicator of sentiment within companies. Let’s explore bullish signs of three insiders currently snapping up company stock.
On Sept. 15, Broadcom director Harry You paid $860,000 to purchase 1,000 shares of AVGO stock at an average price of $858.96 each. He now owns 3,510 Broadcom shares, according to regulatory filings made with the U.S. Securities and Exchange Commission (SEC). And this director isn’t the only insider buying AVGO stock.
You’s purchase of AVGO stock follows fellow Broadcom director Check Kian Low’s purchase earlier this month. Low paid $9.6 million to acquire 11,000 shares of Broadcom stock at an average price of $872.03 on Sept. 6. The stock buys come after Broadcom’s shares sold off despite the company reporting a decent Q2 print.
Some analysts attributed the selloff to the fact that Broadcom’s earnings weren’t as robust as fellow semiconductor company Nvidia (NASDAQ:NVDA). Regardless, AVGO stock is up 53% this year.
Regulatory filings show that Alan Attal and Larry Cheng, two GameStop directors, have purchased GME stock in recent weeks. On Sept. 8, Attal paid $266,700 for 15,000 shares at an average price of $17.78 each. He now owns 562,464 GameStop shares, according to SEC filings. Cheng also recently bought GME stock, paying $105,900 for 6,000 shares at an average price of $17.65 each. He now holds a total of 55,088 shares.
These insider buys come as GameStop’s share price is falling sharply since June when the company fired CEO Matt Furlong and canceled a planned earnings call with analysts. Over the last 12 months, GME’s stock has declined 35%.
Also, the recent share purchases by Attal and Cheng come ahead of the upcoming release of a movie about the meme stock rally called Dumb Money.
Foot Locker (FL)
Shares of sneaker and athletic apparel retailer Foot Locker (NYSE:FL) have been pummeled this year. The company issued a string of disappointing financial results and announced that it is suspending its quarterly dividend payment.
Year to date (YTD), FL stock is down 50%. That brings its decline over five years to 62%. Yet, at least one person still seems to have faith in FL stock. Company CEO Mary Dillon has been buying up shares as the price decline continues.
On Sept. 8, Dillon paid $100,100 for 5,510 shares of FL stock at an average price of $18.17 each. She purchased the shares through a trust that now holds 27,649 Foot Locker shares. Dillon owns another 115,388 shares of FL stock through a personal account. And this isn’t the first time that she bought shares in the company she runs. In May of this year, her trust paid $250,000 for 9,525 shares of FL stock at an average price of $26.20 each.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.