If multiple insiders are buying company stock, it’s often worth taking a closer look at that security. This buying pattern – which is called ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster purchase at AT&T Inc (T:US). AT&T is the world’s largest telecommunications company by revenues and the second largest provider of mobile telephone services. The owner of WarnerMedia, it is focused on software-based entertainment and premium content, as well as broadband connectivity. The company is listed on the New York Stock Exchange and currently has a market capitalization of $211 billion.
AT&T Inc: Insider Buying
Our insider transaction data shows that between 18 May and 20 May, three insiders at AT&T bought stock. Those who purchased shares were:
- CEO John Stankey (34,614 shares)
- CFO Pascal Desroches (19,976 shares)
- Board member Stephen Luczo (100,000 shares)
Combined, these three insiders spent around $4.6 million on AT&T stock.
This cluster purchase is worth highlighting for a number of reasons. Firstly, it involves two top-level insiders – the CEO and the CFO. These two insiders are likely to have a deep level of insight into the company and its future prospects.
Secondly, board member Stephen Luczo has an investment background. Currently, he is Managing Partner at Crosspoint Capital Partners. It’s fair to assume that he knows what he is doing.
Finally, the purchases here are substantial. Our data shows that this buying activity represents the largest amount of insider buying at AT&T within a quarter for several years. Our Insider Model views this buying activity as bullish.
On 17 May, AT&T and Discovery, Inc. announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports, and news assets with Discovery's non-fiction and international entertainment and sports businesses to create a premier, standalone global entertainment company.
Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders will receive stock representing 71% of the new company. The Boards of Directors of both AT&T and Discovery have approved the transaction.
AT&T believes this transaction will create “substantial value” for both AT&T and Discovery shareholders by bringing together the strongest leadership teams, content creators, and film libraries in the media business, accelerating both companies’ plans for leading direct-to-consumer (DTC) streaming services for global consumers, and creating at least $3 billion in expected cost synergies annually. Additionally, AT&T believes the transaction allows the company to better capitalize on the longer-term demand for connectivity:
“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said CEO John Stankey.
The insider buying activity here suggests that insiders are confident this deal will add value. We see this insider trading activity as bullish.