Cluster buying is one of the most bullish insider transaction patterns. This occurs when three or more insiders buy stock in a company in a short period of time.
In this report we are going to highlight a recent cluster at Bandwidth Inc (BAND:US). Bandwidth is a leading global cloud communications company based in the US. The software company reaches over 60+ countries and has over 20 years in the technology space.
The company is listed on the NASDAQ and currently has a market capitalization of $669.62 million.
Bandwidth: Insider Buying
Our data shows that between February 28 and March 8, 2022, three top level insiders at Bandwidth Inc purchased BAND stock between $30.73 and $27.43 per share. Those who bought shares were:
- CFO Daryl Raiford (9,760 BAND shares between $30.73 and $30.75 per share)
- General Counsel Richard Asbill (3,000 BAND shares at $30.80 per share)
- Director Brian Baily (10,000 BAND shares at $27.43 per share)
Combined, these three insiders spent around $666,559 on stock.
What does this mean for Bandwidth?
There are a few things about this cluster of purchases that stick out.
One is that everyone who has purchased stock is a top-level insider at Bandwidth Inc. This implies that they are likely to have extensive knowledge of the company's operations.
Another factor is that Mr. Asbill and Mr. Raiford have grown the size of their holdings by around 216% and 67%, respectively. When an insider significantly increases their holding at a company, it’s normally indicative of their confidence that the stock will rise in value.
This was also CFO Brian Bailey’s first purchase of BAND stock. This cluster buying comes in light of Bandwidth’s Q4 and full year financial report for 2021 being published.
Bandwidth Exceed Expectations
In its Q4 report, Bandwidth Inc posted healthy numbers for FY 2021, with both top and bottom line numbers surpassing industry expectations.
Despite being forecasted between $115.7-$120.7 million, quarterly revenues were $126.1 million, up 11.6% year over year. This improved revenue can be attributed to the company’s Communications Platform-as-a-Service (CPaaS) offering, which was up 3.4% in revenue year over year, as well as higher demand for cloud-based products.
These numbers were negatively impacted by DDoS attacks, impacting network services and transaction volume. However, Bandwidth Inc. was still able to post strong numbers in light of these setbacks.
Due to this strong performance and the large scale of the cluster, we view these trades as a bullish indicator.
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