Top-level company insiders’ trading patterns can provide valuable clues to investors. These individuals know their companies better than any analyst or outsider could ever hope to. When they buy stock, it is generally positive news.
Here, we are going to highlight insider purchases at FireEye Inc (FEYE:US). FireEye is a technology company that operates in the cyber security space and specializes in the detection and prevention of cyber-attacks. In recent years, it has made a series of bolt-on acquisitions to ensure that it has a presence in all areas of the cyber security space. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $4.7 billion.
FireEye Inc: Insider Buying
Form 4 filings show that on 4 June the President/COO of FireEye, John Watters, purchased 25,000 FEYE shares at a price of $18.75 per share. This purchase cost the insider approximately $450,000 and increased his holding by around 10%. On 9 June, a Director of FireEye, Arthur Coviello, purchased 10,000 FEYE shares at a price of $20.18. This purchase cost the insider just over $200,000.
These transactions caught our eye due to the fact that they are the first insider purchases at FireEye for over two years. Additionally, Watters and Coviello have spent $650,000 on stock between them which suggests that they are confident that the share price will move upwards.
It’s worth noting that both of these insiders are industry veterans. Watters founded iSIGHT Partners – which FireEye acquired in 2016 – and held many senior roles at FireEye becoming COO earlier this year. Coviello has been in the industry for over 25 years and was Executive Chairman of RSA, the security division of EMC. He is a Venture Partner at Rally Ventures and advises businesses in the technology industry. This experience means that these insiders are likely to have a good read on FireEye’s growth prospects.
Strong Revenue Growth
FireEye recently produced an impressive set of Q1 results that showed a significant increase in revenues versus the prior year and a healthy cash flow figure. Revenue came in at $246 million which was 10% higher than a year before with annualized recurring revenue up 9% at $643 million. Margins were also up on Q1 2020 while cash flow was $21 million versus -$24 million in last year’s Q1 update.
“Our first quarter revenue growth was led by our Platform, Cloud Subscription and Managed Services category, which increased 26% year over year, and our Professional Services category, which increased 25% year over year,” commented Kevin Mandia, FireEye Chief Executive Officer.
On the back of these results, the company increased the guidance ranges for 2021 revenue. It now expects revenue to be in the range of $1.01 billion to $1.03 billion for the full year.
Given these strong results, we see the recent insider buying at FireEye as bullish. The recent purchases signal that the insiders believe that there is further momentum in the share price to come.