If a corporate insider is spending a substantial amount of money on company stock, it’s often worth taking a closer look. Insiders are some of the most informed participants in the market and their trades can provide valuable investment insights.
Here, we are going to highlight insider buying at Freeport McMoRan Inc (FCX:US). Freeport McMoRan is an American mining company that predominantly produces copper, gold, and molybdenum. The company’s assets are diversified geographically across Asia, North America, and South America. It is listed on the New York Stock Exchange and currently has a market capitalization of $51.5 billion.
Freeport McMoRan Inc: Insider Buying
Our insider transaction data shows that on April 25, a director at Freeport McMoRan, Hugh Grant, purchased 12,300 FCX shares at a price of $40.75 per share. This purchase cost the insider about $500,000 and increased his holding by roughly 350%.
This insider buying at Freeport McMoRan is worth highlighting for a couple of reasons.
Firstly, Mr. Grant was CEO at agrochemical giant Monsanto Company for fifteen years before it was acquired by Bayer. His impressive tenure was recognized by Barron’s who included Mr. Grant in their annual list of the world’s 30 most respected CEOs in 2009. In his 37 years at the company, Mr. Grant gained global experience in Asia, Europe, and the US. Given his impressive employment history, Mr. Grant is likely to have a good understanding of Freeport McMoRan’s prospects.
Secondly, the director has upped his stake significantly and has spent a large sum of money on company stock. This suggests that Mr. Grant is very confident that the shares are undervalued by the market at present. Our insider transaction data shows that this is the first substantial insider purchase at the company for over a year, which is very interesting.
Strong Financial Performance
Freeport McMoRan produced a very strong set of Q1 2022 figures that were a big improvement on the Q1 2021 results.
Thanks to increases in production from its mines and a significant improvement in the prices realized for its mined resources, revenue came in at $6.6 billion for the quarter, up from $4.85 billion achieved a year prior. Meanwhile, operating income jumped up to $2.81 billion from $1.53 billion a year earlier. Operating cash flows of $1.69 billion were around 60% higher than the levels achieved in the first quarter of 2021.
The company noted that it had bought back $1.1 billion of company stock up until April 20 and has authorization to buy back $3 billion of stock in total.
"The strong operational and financial results we are reporting today reflect our long-term, ongoing focus on solid execution of our plans and the achievements of our committed global team. As a premier global leader in producing copper responsibly, with large-scale, long-lived reserves and an attractive portfolio of organic growth opportunities, we are strongly positioned to benefit from increasing global copper demand for infrastructure development and accelerating clean energy investments,” said Richard Adkerson, Chairman and CEO.
On the back of an impressive set of Q1 numbers and a buoyant outlook for the business, we see the recent insider buying as bullish. It would suggest that a decorated top-level businessman is impressed with how the company is performing and that they believe the market has not yet re-rated the shares to the level he believes they should be trading at.