When an insider at a small company makes a large stock purchase, it’s often worth taking a closer look. Smaller companies are typically less researched than larger organizations, meaning that they offer more potential for explosive gains.
In this report, we are going to highlight some interesting insider buying activity at a small US-listed company, Semtech Corp (SMTC:US). Semtech is a supplier of high-performance analog and mixed-signal semiconductors that serves the infrastructure, high-end consumer, and industrial equipment markets. It is listed on the Nasdaq and currently has a market cap of around $1.6 billion.
Large Stock Purchase
Our data shows that on September 18, board member Paul Walsh purchased 20,000 SMTC shares at a price of $24.83 per share. This trade cost the insider approximately $497,000 and increased his holding to 20,888 shares.
This trade is notable due to the fact that Mr. Walsh has many years of experience in the semiconductor industry. Most recently, he was CFO and Treasurer of Allegro MicroSystems Inc. Prior to this, he served Silicon Laboratories Inc., Teradyne Inc., and Analog Devices Inc.
Additionally, this is a large stock purchase that has increased the size of the insider’s holding significantly. Our Insider Model views the trade as bullish.
Share Price Fall
Semtech’s revenues and earnings have been negatively impacted by macroeconomic softness and weak conditions in the consumer sector over the last 12 months. And this is reflected in its share price, which is down by a double-digit percentage over the last year (and down about 70% from its 2021 highs).
However, the company continues to grow at a healthy clip (Q2 net sales were up 14% year on year with cloud data center sales up 114% sequentially). And management is confident that performance will strengthen when economic conditions recover.
“I am confident that our ongoing operational refinements and strong presence in key markets keep us poised to recover as economic conditions evolve," said CEO and President Paul H. Pickle in the company’s Q2 results.
In light of the confidence from management, we see the insider buying here as a bullish development.
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