One of the most bullish signals in insider transaction analysis is ‘cluster buying.’ This is where three or more insiders are purchasing stock simultaneously.
In this report, we are going to highlight cluster buying at Blucora Inc (BCOR:US). Blucora is a provider of tax-focused wealth management services and software. Its brands include TaxAct, which is an online tax filing system, and Avantax, which provides financial advisors, CPAs, and tax professionals with support, training, and tax tools. The company is listed on the Nasdaq Global Select Market and currently has a market capitalization of $806 million.
Blucora: Insider Buying
Our data shows that between December 13 and December 15, four insiders at Blucora purchased stock. Those who picked up shares were:
- President & CEO Chris Walters (10,000 shares @ 16.73 per share)
- CFO Marc Mehlman (10,000 shares @ $16.50 per share)
- Chair Georganne Proctor (3,025 shares @ $16.35 per share)
- Board member Mark Ernst (50,000 @ $16.51 per share)
Combined, these insiders spent around $1.2 million on Blucora stock.
Bullish Cluster Buying Pattern
This cluster buying looks very bullish, in our view. One reason we say this is that the cluster buying pattern contains purchases from three top-level insiders – the President & CEO, the CFO, and the Chair. All three of these insiders are likely to have a superior level of insight into the company’s operations and performance.
Another reason is that board member Mark Ernst is an investment professional with a background in financial services and tax. Currently, he serves as the Managing Partner at Bellevue Capital LLC, a private investment firm, a role he has held since May 2018. Previously, he served in various executive roles at H&R Block, Inc., including as Chairman, President and CEO from 2001 to 2007, and as COO from 1998 until 2000. He also served as Deputy Commissioner for Operations Support for the Internal Revenue Service (IRS) from January 2009 to November 2010. So, he is likely to have a good understanding of the company’s prospects.
Share Repurchase Program Increased
Blucora stock currently trades at just 10 times next year’s expected earnings and management clearly feels this valuation is too low. This is demonstrated by the fact that on December 9, the company increased its share repurchase program by $28.3 million, bringing the total authorized repurchases under the program to $100 million.
“We have attractive investment opportunities in the business to create further profitable growth. But, given the positive outlook and momentum of both our wealth management and tax software businesses, we believe that repurchasing Blucora shares also represents an attractive use of capital. Given our forecasts and opportunities, we believe buying shares is a terrific investment for the Company and will enhance shareholder value,” commented President and CEO Chris Walters after announcing the additional share repurchase. “The expanded stock repurchase program reflects Blucora’s strong balance sheet and cash flow generation, as well as our commitment to allocating capital to maximize long-term shareholder value,” he added.
It’s worth noting that in the company’s recent Q3 results, the group provided a preliminary outlook for full year 2022 operating income of between $98 million and $106 million. This would represent an all-time high.
In light of these developments, we see the insider buying here as a bullish indicator.