Corporate insiders tend to have the most up-to-date information on a company’s operations, so if a CEO is buying company shares, it’s often worth investigating the stock further as it’s a sign the stock could perform favourably.
This particularly relevant when high-level insiders make trades in close proximity to each other. This is known as cluster buying. Specifically, cluster buying refers to three or more insider trades made in a short period of time.
Investors should pay attention when a group of top-level insiders make large purchases within their own company.
In this series we round up some of the most interesting cluster buying reports, this time from reports we published November 2021. Below are three companies that experienced notable insider buying clusters.
1. Pandora A/S (PNDORA:DC)
Based in Denmark, Pandora is a multinational jewelry retailer and manufacturer. Listed on the Nasdaq Copenhagen Stock Exchange, Pandora currently has a market capitalization of DKK 88.86 billion.
We reported on this cluster in late November 2021:
- President/CEO Alexander Lacik (430 PNDORA shares)
- CFO Anders Boyer-Sogaard (1,000 PNDORA shares)
- Chairman of the Board Peter Ruzicka (2,000 PNDORA shares)
- Deputy Chairman Christian Frigast (5,000 PNDORA shares)
- Independent Director Isabelle Parize (1,500 PNDORA shares)
- Independent Director Catherine Spindler (405 PNDORA shares)
This cluster cost the insiders about DKK 8.8 million in total, which is a significant amount of money indicating strong confidence that the stock price may continue to rise.
This is a highly experienced group of insiders, who have a vast understanding of both Pandora’s prospects and the retail sector. Supported by previous well-timed purchases in the past, as well as strong Q3 results, we see this cluster as a bullish signal.
2. Skillz Inc (SKLZ:US)
Through patented technology, Skillz manages an e-sports platform that’s hosts billions of casual e-sports tournaments globally, distributing millions in prizes monthly. The company has a current market capitalization of $5.1 billion and is listed on the New York Stock Exchange
In November 2021, we reported on large cluster of insider trades:
- CEO Andrew Paradise (432,105 SKLZ shares)
- Chief Revenue Officer Casey Chafkin (86,500 SKLZ shares)
- Board Member Harry Sloan (80,000 SKLZ shares)
As a collective, these insiders spent about $7 million on SKLZ stock, with CEO Andrew Paradise notably spending a sizeable chunk of this cluster.
Interestingly these are the first insider purchases since Skillz went public in 2020, with all insider activity up till now being sells. Both the CEO and CRO are co-founders, with Sloan being a founding investor of the company. Having been involved since its inception, very few will have better insight into the company’s future outlook.
This is all the more fascinating when factoring in a short-selling attack early in 2021, with the stock making a progressive rise from $8 to $12. Based on the stock’s progressive recovery, strong Q3 results and promising insider trades, we see this cluster as a bullish signal.
3. Intel Corp (INTC:US)
Staying in the United States for this entry, we’re looking back at the recent cluster buying experienced by Intel Corp in November.
Intel is an industry leader in semiconductor manufacturing, having made a shift in recent years to become a more data-focused company from its PC-centric roots.
- CEO Pat Gelsinger (10,000 INTC shares)
- Independent Director Jim Goetz (20,000 INTC shares)
- Independent Director Frank Yeary (10,000 INTC shares)
- Independent Director Dion Weisler (5,015 INTC shares)
- Independent Director Risa Lavizzo-Mourey (5,000 INTC shares)
These top-level insiders spent around $2.5 million on INTC stock. CEO Pat Gelsinger in particular is interesting, having been ranked ‘Best CEO in America in 2019’, who purchased a large amount of shares after returning to Intel in 2021.
Frank Yeary and Jim Goetz are also standouts amongst this group of insiders, with both being expert investors with extensive backgrounds in the finance and venture capital industries. Their large presence in this cluster suggests Intel could be undervalued based on its recent share price dip, and could soon rise in price.
This fall in its share price comes after underwhelming Q3 results, but those results are not inherently negative. CEO Pat Gelsinger had confident tone in the company’s earnings report, with a look ahead to potentially strong revenue in Q4.
Based on the company’s optimism and scale of these trades, we see the cluster buying here as a bullish indicator.
If you’re interested in more 2iQ Research reports on cluster buying in November, check out these blogs:
Read other reports like this on the 2iQ blog.
