Insider buying can provide valuable trading signals. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight a large insider purchase at Broadcom Inc (AVGO:US). Broadcom is a global technology company that specializes in semiconductor and infrastructure software solutions. It’s listed on the Nasdaq and currently has a market capitalization of around $359.7 billion.
Our data shows that on September 6, board member Check Kian Low purchased 11,000 AVGO shares at a price of $872.03 per share. This trade cost the insider approximately $9.6 million and increased his holding to 15,951 shares.
This trade is notable for several reasons.
Firstly, Mr. Low has an investment background. Currently, he serves as a director of NewSmith Capital Partners LLP, an independent partnership providing corporate finance advice and investment management services that he founded.
Prior to founding NewSmith Capital Partners in 2003, he held various positions at Merrill Lynch & Co., including Chairman for the Asia Pacific Region.
Secondly, the insider has upped his stake considerably (+222%) with this trade. This suggests that he is very bullish right now.
Price Target Upgrades
Broadcom shares have pulled back since the company posted its Q3 fiscal 2023 results.
While the company – which is expected to be a major beneficiary of the AI boom – beat on both the top and bottom line for Q3, investors were unimpressed with the Q4 guidance, which was slightly below forecasts, and nowhere near as strong as Nvidia’s recent guidance.
What’s interesting though is that, on the back of the Q3 results, many brokers raised their price targets for Broadcom stock. For example, Bernstein raised its target from $875 to $1,000 while Oppenheimer went from $900 to $990.
In light of these price target upgrades, and the fact that the stock is trading on a very undemanding P/E ratio right now, we see the insider buying here as a bullish development.