Insider buying can offer clues in relation to a stock’s future direction. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some recent insider buying 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. Its key offering, Mandiant, provides a dynamic view of the attack lifecycle, combining machine intelligence, adversary intelligence, and operational intelligence to form the most comprehensive library of threat actor activity available. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $4.2 billion.
FireEye Inc: Insider Buying
Our insider transaction data shows that in August, two insiders at FireEye have purchased stock. On 9 August, Chief Revenue Officer Bill Robbins purchased 26,000 shares at a price of $16.92, spending $440,000 on stock. Then, on 10 August, President and COO John Watters purchased 10,000 shares at a price of $17.82 per share, spending $178,000 on stock.
4 Large Purchases Since June
This insider trading activity is interesting because we have now observed four large purchases at FireEye since early June. In total, insiders have spent just under $1.3 million on FEYE stock since 4 June. Our Insider Model views this buying activity as bullish.
It’s worth noting that both Robbins and Watters have considerable industry experience. Robbins has more than 25 years of global leadership experience in cyber security, cloud services and other technology markets. Previously, he held senior roles at Symantec and Veritas Software. Meanwhile, Watters previously served at iSIGHT Partners and iDEFENSE before joining FireEye in 2016 when the company acquired iSIGHT Partners. This industry experience means that the insiders are likely to have a good read on FireEye’s growth prospects.
Share Price Pullback
FireEye’s recent second-quarter results, posted on 5 August, were solid. For the quarter, revenue from continuing and discontinued operations came in at $248 million, up 8% year on year, while revenue from continuing operations amounted to $114 million, up 17% year on year. Net cash flow provided by operating activities was $23 million for the quarter, an increase of 60% from the second quarter of 2020, while non-GAAP net loss per share from continuing operations for Q2 was -$0.14 versus -$0.13 in Q2 2020.
“The Mandiant Solutions business continued to deliver strong growth in revenue and annualized recurring revenue for the second quarter ended June 30, 2021,” commented CEO Kevin Mandia.
The market was unimpressed with the results, however, and on 6 August, the share price fell from $20 to around $16.50. The insider buying here suggests that those within the company see value on offer after the share price pullback. We see the insider buying at FireEye as a bullish indicator.