If a CEO is spending millions of dollars on company stock, investors should take note. These insiders tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at Boeing Co (BA:US). Boeing is a leading manufacturer of commercial jetliners. It also manufactures defense, space, and security systems. It is listed on the New York Stock Exchange and currently has a market capitalization of aproximately $104.51 billion.
Insider buying at Boeing
Our data shows that between November 4, two insiders at Boeing Co bought company stock. Those were purchased shares were:
- President and CEO David Calhoun (25,000 shares at $158.81 per share)
- Board member Steven Mollenkopf (1,285 shares at $15.09 per share)
Combined, the two insiders invested around $4.17 million in stock.
This is a large trade from the President and CEO, not only in nominal terms, but also in relative terms. By buying 25,000 shares, the insider has increased the size of his position by 24%. This suggests that he sees value in the stock right now. Our Insider Model views the trade as bullish.
It’s worth noting that Mr. Calhoun is not the only insider that has purchased stock recently. On the same day that Mr. Calhoun made his purchase, board member Steven Mollenkopf purchased 1,285 shares at a price of $157.09 per share. This trade cost the insider around $202,000.
Higher free cash flow
Boeing shares recently moved higher after the company forecast higher free cash flow next year.
At its investor meeting in Seattle on November 2, the aerospace company said that it expects to generate $3 billion to $5 billion in free cash flow in 2023, higher than the $1.5 billion to $2 billion expected this year. And by 2025/2026, it expects to be generating around $10 billion in free cash flow per year.
Boeing also said that it expects to deliver 400 to 450 737 MAX airplanes in 2023, up from around 375 this year, along with 70 to 80 787 planes.
The market clearly liked the news, as the stock has risen nearly 20% since the investor meeting.
In light of this free cash flow forecast, we see the insider buying here as a bullish indicator.