Insider buying can provide investors with valuable trading signals. 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 interesting insider buys at Fisker Inc (FSR:US). Fisker is an American electric vehicle (EV) company that is based in California and led by Henrik Fisker, who previously led the development of BMW’s Z8 and also designed Aston Martin’s DB9. Fisker’s flagship model is the ‘Ocean,’ an all-electric SUV designed to go head-to-head with Tesla’s Model Y. It is listed on the New York Stock Exchange and currently has a market capitalization of $6.0 billion.
Fisker Inc: Insider Buying
Our data shows that between November 15 and November 17, three Fisker board members bought stock. Those who purchased shares were:
- Wendy Greuel (1,175 shares @ $21.02 per share)
- Mark Hickson (44,900 shares @ $21.90 per share)
- Bill McDermott (11,359 shares @ $21.82 per share)
Combined, these insiders spent around $1.25 million on Fisker stock.
First Insider Buys
These trades caught our attention due to the fact that they represent the first insider buys at Fisker since the company went public in October 2020.
What’s interesting about this insider activity is that two of the three insiders have increased the size of their positions significantly with these trades. Hickson’s purchase of 44,900 shares has increased the size of his holding by 259%. Meanwhile, McDermott’s purchase has increased the size of his holding by 65%. This suggests that the insiders are confident the stock is set to move higher.
High Short Interest
Normally, when multiple insiders are buying stock simultaneously, we see it as bullish. This buying pattern – which is known as ‘cluster buying’ – tells us that there is a consensus of opinion within the company that the shares are priced too low.
However, in this case, we think caution is warranted towards the stock. That’s because, looking at the short selling data on Fisker, we can see that at present, 54.4 million shares are on loan, which represents around 39% of the free float.
Short interest of 39% is quite concerning, in our view. A figure this high indicates that institutions are aggressively betting against the stock because they expect it to fall. The stock’s utilization rate of 81.4% is also concerning. This tells us that there is high demand from short sellers for the stock right now.
As for why short sellers are targeting Fisker, it could be related to the fact that the company is not generating any meaningful revenues yet and posting big losses. In Q3, Fisker posted a net loss of $109.8 million. It could also be related to the fact that the stock is up around 40% over the last month on the back of electric vehicle hype.
Whatever it is, we think caution is warranted towards Fisker stock right now. The high level of short interest indicates that short sellers expect the stock to fall.