Not to be confused with insider trading, insider buying is a legitimate move made by the key decision-makers at a company. So, who are these insiders? "Insiders" are a group that includes a company's officers and directors, as well as any shareholders with a stake of 10% or more. Insider buying or selling activity can be accessed through publicly available Form 4 filings.
Typically, when insiders are buying shares with their own money, it signifies a vote of confidence by the management about the company's prospects. Notably, insiders might buy shares of their own company if they believe that the market is undervaluing the stock at current levels.
With this in mind, here we'll highlight three stocks from the tech space that have attracted insider buying activity this month - even as many stocks in the sector continue to cool off from the AI-driven rally that defined the first half of the year.
Broadcom
Based out of San Jose, Broadcom (AVGO) is one of the biggest semiconductor companies in the world. AVGO provides semiconductor and infrastructure software solutions for the data center, networking, software, broadband, wireless, storage, and industrial markets. The company currently commands a mammoth market cap of $342.80 billion and offers a dividend yield of 2.71%.
Broadcom's share price has risen 49.5% on a YTD basis, outperforming the Nasdaq 100 Index's ($IUXX) gain of about 35.4% over the same period.
Board members Harry L. You and Check Kian Low have both bought shares of AVGO this month, even as the stock has dropped more than 10% since the start of September.
Low purchased 11,000 shares on Sept. 6 at an average price of $872.03 per share, for a total value of about $9.59 million. Then, on Sept. 15, You purchased 1,000 shares at an average price of $858.96 for a total value of $858,958.
In today's trading, AVGO has recovered from an intraday low of $795 to trade back above $818 per share, after partner Alphabet (GOOGL) shut down media reports that it was considering breaking up with Broadcom.
Prior to this week's volatility, AVGO had been pulling back despite reporting solid quarterly results and receiving approval for its VMware acquisition in the UK.
Broadcom's numbers for the fiscal third quarter surpassed expectations on both revenue and earnings. Revenues for the quarter came in at $8.8 billion, up 5% from the prior year. EPS of $10.54 topped the consensus estimate of $10.43 by a comfortable margin - and in fact, Broadcom has beaten bottom-line expectations in each of the past five quarters.
As for the impending acquisition of VMware, that remains on track to close on Oct. 30, 2023, after Broadcom said last month the deal had received approval from UK regulatory authorities. This follows approval from the European Union, as well as Australia, Brazil, Canada, Israel, South Africa, and Taiwan - and now, regulators in China seem to be warming to the acquisition, as well.
Overall, analysts remain bullish about Broadcom stock. The consensus rating is a “Strong Buy” with a mean target price of $958.24. This indicates an upside potential of about 17% from current levels. Out of 20 analysts covering the stock, 15 have a “Strong Buy” rating and 5 have a “Hold” rating.
Asana
Founded in 2008, Asana (ASAN) is a work management platform that helps teams organize their work, collaborate effectively, and track their progress. The company has over 100,000 paying organizations and millions of users worldwide. The California-based company currently has a market cap of roughly $3.79 billion.
Asana stock has rallied 25% on a YTD basis - falling short of the Nasdaq 100 Index's gains, but outpacing a 13.5% rise for the broader S&P 500 Index ($SPX).
Chairman & CEO Dustin A. Moskovitz has been an enthusiastic buyer of his own stock for years - and that hasn't changed in September, even as ASAN has dropped more than 19% since the start of the month.
The CEO's most recent transaction was on Sept. 19, when he bought more than 1 million Asana shares at an average price of $18.04, for a total investment of $18.3 million. In September alone, Moskovitz has spent $29.45 million on his own stock, and now holds a 35.83% stake - up from 33.09% just a few months ago.
Asana's latest results for the fiscal second quarter were impressive. The loss per share for the quarter ended July 31 stood at $0.04, which was much less than the $0.34 reported in the year-ago period and narrower than the consensus estimate for a loss of $0.12 per share. Notably, the company's losses have been narrower than expected in each of the past five quarters.
The company's revenues rose by 20.4% during the period to $162.45 million, led by an increase in the number of customers spending more than $5,000 (up 15% YoY) and $100,000 (up 20% YoY).
Plus, Asana recently fortified its AI capabilities with the launch of a productivity management program powered by artificial intelligence. This program will provide customers with enhanced executive reporting, standardization of goals, the ability to plan projects with a clear visualization of certain data and more.
Overall, analysts have given out a “Hold” rating on the stock with a mean target price of $22.18, which indicates upside potential of about 28.9% from current levels. Out of 12 analysts covering the stock, 2 have a “Strong Buy” rating, 8 have a “Hold” rating, and 2 have a “Strong Sell” rating.
Domo
We conclude our list with Domo (DOMO), a cloud-based business intelligence platform that helps companies visualize and analyze their data. Established in 2010, Domo's current market cap stands at $366.24 million.
Domo's share price has declined in 2023, starkly underperforming the Nasdaq 100 Index with a loss of more than 31%. Per the chart below, the stock wasn't doing too bad until late August, when investors punished the stock hard after its second-quarter earnings results.
Domo's revenues for the quarter ended July 31 came in at $79.67 million, up 5.5% from the previous year, while the adjusted loss per share of $0.02 was better than expected. However, the stock fell 35% in a single day as investors sold a downward revision to Domo's full-year guidance.
The software stock's downward momentum has slowed since that Aug. 25 bear gap, which Director David Daniel III may have used to average down on his year-to-date DOMO purchases; the board member made his biggest share pickup of the year on Aug. 29 at $10.93, bringing his stake to 0.92%.
And just a few days ago, as DOMO briefly dipped into single-digit territory, CEO Joshua James bought 39,300 shares at an average price of $9.77, for a total investment of $384,189. Earlier this year, James previously bought shares in April, when he purchased 72,500 shares of the company for $14.11 each, or roughly $991,500.
Overall, analysts remain cautiously optimistic about the stock, with a “Moderate Buy” rating and a mean target price of $17.25. This denotes an upside potential of roughly 75% from current levels. Out of 4 analysts covering the stock, 2 have a “Strong Buy" rating and 2 have a “Hold” rating.
