CFO stock purchases can be extremely informative insider transactions. CFOs have an in-depth understanding of their firms’ 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 recent CFO purchase at First Solar Inc (FSLR:US). First Solar is an American manufacturer of solar panels. The company, which was founded in 1990, has developed and constructed many of the world’s largest grid-connected photovoltaics (PV) power plants. It is listed on the Nasdaq and currently has a market cap of $10.43 billion.
Insider buying at First Solar
Our insider transaction shows that on August 1, First Solar’s CFO Alex Bradley bought 1,990 FSLR shares at a price of $100.56 per share. This trade cost the insider approximately $200,000 and increased his holding to 27,320 shares.
Mr. Bradley has considerable company experience. Before being appointed CFO of First Solar in July 2016, he was Vice President, Treasury and Project Finance. During his time at First Solar, he has led or supported the structuring, sale, and financing of over $10 billion and approximately 2.7 GW of the company’s worldwide development assets, including several of the largest photovoltaic power plant projects in North America.
Meanwhile, he also has substantial investment experience. Prior to joining First Solar in 2008, he worked at HSBC in investment banking and leveraged finance covering the energy and utilities sector. Given this background, he is likely to have a good understanding of the stock’s intrinsic value.
Share price spike
First Solar’s share price spiked in late July after Senate Democrats said that they had reached a deal on the Inflation Reduction Act. This is set to invest in energy technologies, including domestic production of solar panels.
After this news, First Solar management advised that it will consider expanding its US manufacturing operations if the proposed climate change legislation – which would subsidize solar equipment production – is signed into law. Previously, the company had said that it was unlikely to build its next factory in the US due to a lack of federal incentives for solar manufacturing.
"In light of these latest developments, and should the Inflation Reduction Act pass with consistent language on solar-related tax credits, we plan to pivot quickly to re-evaluate US manufacturing expansion," said CEO Mark Widmar on a conference call with analysts after the company's quarterly results.
The Inflation Reduction Act, and a move to boost domestic production, could provide many benefits for First Solar. Currently, around 90% of US solar panels are made overseas, which has challenged the industry in the last two years amid pandemic-related supply chain disruptions and other issues.
The fact that Mr. Bradley invested $200,000 in First Solar stock after the share price spike suggests that he expects the stock to continue rising. We see this insider trading activity as a bullish indicator.