Insider Buying

Insider buying: Adobe CFO buys $936k worth of stock after share price collapse

Adobe Inc
(ADBE:US)
12 months:
-51.67%
Activity:
Bullish
Pattern:
Large purchase from CFO
News:
Announced Figma acquisition
Adobe Inc
(ADBE:US)
12 months:
-51.67%
Activity:
Bullish
Pattern:
Large purchase from CFO
News:
Announced Figma acquisition

If a CFO is buying company stock, it’s often worth taking a closer look. CFOs have deep insight into their organizations' financials, and some studies have found that these insiders earn higher profits following their purchases of company shares than CEOs.

In this report, we are going to highlight a large CFO purchase at Adobe Inc (ADBE:US). Adobe is a software company that offers products designed for photo and video editing as well as digital marketing solutions. It is best known for its Photoshop and Premiere Pro software – which is generally seen as the gold standard in the creative industry. The company is listed on the Nasdaq and currently has a market cap of $129.9 billion.

Insider buying at Adobe

Our insider transaction data shows that on September 22, Adobe CFO Dan Durn bought 3,250 ADBE shares at a price of $288.11 per share. This trade cost the insider approximately $936,000 and increased his holding to 8,948 shares.

Another board member purchase

Our records show that on September 27, board member David Ricks picked up 1,200 shares at a price of $280.56 per share (total cost: $335,563), increasing his holding to 5,139 shares. This suggests that sentiment towards the stock within the boardroom is positive right now.

High-conviction buy

This trade is worth highlighting for a couple of reasons. Firstly, Mr. Durn has spent a large sum of money on Adobe stock here and boosted the size of his position by nearly 60%. This suggests that he is very confident the stock is set to move higher.

Secondly, Mr Durn has an investment background. Previously, he served as Managing Director, Head of Mergers and Acquisitions and Strategy at Mubadala Technology Fund and prior to that, he served as Vice President of Mergers and Acquisitions in the technology practice at Goldman Sachs. This background means he is likely to have a good understanding of Adobe’s intrinsic value.

Figma acquisition

Adobe’s share price recently tanked after the company announced that it is planning to acquire cloud-based designer platform Figma.

While Silicon Valley was impressed with the deal for Figma – which has become a hugely popular collaboration tool among designers since its launch in 2016 – Wall Street wasn’t, mainly due to the acquisition price of $20 billion (around 50 times Figma’s sales).

"We think the company overpaid for Figma, which indicates it was a defensive move, and the deal adds another layer of execution risk over the next few quarters," said analysts at Oppenheimer.

"This deal looks very expensive, and I don't understand why Adobe needs to spend this much on a company with $400 million in revenue that overlaps so much with its existing offerings. It seems to be an admission that they are losing traction in interactive web design," said John Freeman, vice president at CFRA Research.

The large stock purchase from Mr. Durn suggests that he is confident Adobe’s potential purchase of Figma will work out in the long run. Given his background, and the size of his purchase, we see this insider trading activity as a bullish indicator.

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