If a CEO is buying company stock, it can pay to take a closer look. It’s not a stretch to say that these insiders are some of the most informed participants in the market.
In this report, we are going to highlight a large CEO purchase at Advanced Energy Industries Inc (AEIS:US). Advanced Energy Industries specializes in the design and manufacture of highly engineered, precision power conversion, measurement, and control solutions for mission-critical applications and processes. Its products are used in a wide range of industries including the semiconductor, industrial, manufacturing, telecommunications, data center computing, and medical industries. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $3.2 billion.
Advanced Energy Industries Inc: Insider Buying
Our insider transaction data shows that on 13 August, President and CEO Steve Kelley bought 5,850 AEIS shares at a price of $85.85 per share. This purchase cost the insider just over $500,000 and increased his holding to 33,752 shares.
Mr. Kelley has over 30 years of experience in the semiconductor industry. Before joining Advanced Energy Industries earlier this year, he was President and CEO of semiconductor package and test company Amkor Technology, Inc., where he led its financial transformation by prioritizing strong revenue growth, efficiency gains, and a culture of continuous quality improvement. He has also held executive leadership roles at Cree, Texas Instruments, and Philips Semiconductor.
What stands out about his latest trade, apart from its size, is that it has increased his holding by 21%. This suggests he is very confident the stock is set to move higher.
Solid Q2 Results
Advanced Energy Industries recently posted a solid set of second-quarter results. For the quarter, revenue was up 6% to $361 million, while Non-GAAP net income came in at $1.25 per share, compared to $1.18 per share in Q2 2020.
During the quarter, the company generated $33.8 million of operating cash flow from continuing operations, made debt repayments of $4.4 million, repurchased $6.5 million of common stock at $90.34 per share, paid $15.1 million for the acquisition of Tegam, Inc., and paid $3.9 million in a quarterly dividend. And on 29 July, the Board of Directors increased the company’s stock repurchase authorization to $200 million.
“We achieved year-over-year revenue and earnings growth in Q2. Although the near-term supply chain and operating environment remains challenging, demand continues to strengthen across all our markets, and we have solid visibility into 2022. We are winning with our highly-engineered, proprietary power solutions, positioning the company to deliver long-term profitable growth,” said Mr. Kelley.
Since the results, the company’s share price has pulled back. Mr. Kelley clearly sees value after the pullback. We view the insider buying here as a bullish indicator.