Corporate insiders have access to the most up-to-date information on their companies and often also have a wealth of experience that can help them evaluate their firms’ prospects. If they are buying company stock, it’s generally worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at Blucora Inc (BCOR:US). Blucora is a provider of tax-focused wealth management services and software. Its brands include TaxAct, which is an online tax filing system, and Avantax, which provides financial advisors, CPAs, and tax professionals with support, training, and tax tools. The company is listed on the Nasdaq and currently has a market capitalization of approximately $1.19 billion.
Insider Buying at Blucora
2iQ’s data shows that on November 17, board member Kan Kotecha purchased 5,000 BCOR shares at a price of $23.73 per share. This trade cost the insider $118,650 and increased his holding to 19,952 shares.
Mr. Kotecha has considerable experience in the financial technology industry. Currently, he serves as Vice President of Engineering at Google, where he leads the digital transformation of Google’s internal functions across Finance, HR, Legal, Marketing, and Real Estate. Prior to this, he served as Chief Technology Officer at Morgan Stanley Wealth Management where he was integral to the successful integration of Smith Barney. Given his background, he is likely to have a good understanding of Blucora’s potential.
What stands out here is that the insider has increased the size of his position by 33%. This suggests that he is quite confident the stock is set to move higher. Our Insider Model views his trade as bullish.
Sale of TaxAct
Blucora is performing well right now.
In the third quarter of 2022, its Avantax division added newly recruited assets of $214 million for a total of approximately $1.3 billion for the first nine months of the year. This is more than the full-year 2021 newly recruited assets figure of $929 million.
Adjusted EBITDA for Q3 was $7.7 million versus -$0.8 million a year earlier.
It’s worth noting that in early November, Blucora announced that it had entered into an agreement to sell its tax software business, TaxAct, to an affiliate of private equity firm Cinven for $720 million in an all-cash transaction. The net proceeds of the sale will be used to pay down debt and return excess capital to shareholders.
On the back of this news, analysts at Barrington Research raised their target price to $30 from $25.
In light of these developments, we see insider buying here as a bullish indicator.