One of the most bullish signals in insider transaction analysis is what’s known as ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.
In this report, we are going to highlight cluster buying at Intel Corp (INTC:US). Intel is a leading semiconductor chip manufacturer, which in recent years, has transformed itself from a PC-centric company to a data-focused company that offers products for a broad range of high-growth markets including cloud computing, AI, and 5G. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $196 billion.
Intel Corp: Insider Buying
Our data shows that on October 25, five insiders at Intel purchased stock at prices of between $49.50 and $49.94 per share.
Those who bought shares were:
- CEO Pat Gelsinger (10,000 shares)
- Independent Director Jim Goetz (20,000 shares)
- Independent Director Frank Yeary (10,000 shares)
- Independent Director Dion Weisler (5,015 shares)
- Independent Director Risa Lavizzo-Mourey (5,000 shares)
In total, these five insiders spent around $2.5 million on Intel stock.
Bullish Cluster Buying
This cluster buying is bullish in our view.
One reason we say this is that CEO Pat Gelsinger has made a large purchase. It’s unlikely that there are many people who have a better understanding of the company than Gelsinger. The CEO – who was ranked ‘Best CEO in America in 2019’ – spent the first 30 years of his career with Intel before leaving in 2009 to join EMC. He came back to the chip company in early 2021.
Another reason is that two of the insiders in the cluster are expert investors. Mr. Yeary is a Managing Member at private investment firm Darwin Capital Advisors and has over 25 years of experience in finance. Previously, he served as Global Head of M&A at Citigroup Investment Banking. Meanwhile, Mr. Goetz is a Partner at VC firm Sequoia Capital. These insiders are likely to have a good understanding of Intel’s intrinsic value.
Share Price Weakness
Intel’s share price fell recently after the company posted Q3 results that were below the market’s expectations.
For the quarter, Intel posted non-GAAP revenue of $18.10 billion, missing the consensus estimate of $18.24 billion. Operating margin was 30.4%, down 1.7% year on year.
However, the Q3 results weren’t all bad. For a start, earnings of $1.71 per share were well above the consensus EPS forecast of $1.11. Secondly, guidance for Q4 revenue was slightly above Wall Street’s expectations. For Q4, the company expects to generate revenue of about $18.3 billion. Analysts had been expecting $18.25 billion. The company also advised that it enjoyed major customer wins across every part of its business during the quarter.
“We are still in the early stages of our journey, but I see the enormous opportunity ahead,” said CEO Pat Gelsinger.
In light of the confident tone from Mr. Gelsinger, we see the insider buying here as a bullish indicator. It suggests that insiders expect the stock to bounce back.