Insider transactions can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more information in relation to a company’s prospects than its executives and directors.
In this report, we are going to highlight some insider buying at Lam Research Corp (LRCX). Lam Research is a leading provider of wafer fabrication equipment and related services to the semiconductor industry. Its customers include Intel, Samsung Electronics, and Taiwan Semiconductor Manufacturing Company. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $63.68 billion.
Lam Research Corp: Insider Buying
Our insider transaction data shows that on April 26, board member Catherine Lego picked up 1,736 LRCX shares at a price of $460.35 per share. This trade cost the insider roughly $800,000 and increased her holding to 49,991 shares.
Ms. Lego – who joined the board in 2006 – has considerable experience in the technology investment space. In 1992, she formed Lego Ventures, LLC to consult with early-stage technology companies. She also serves as the General Partner of The Photonics Fund – an early-stage venture fund focused on investing in components and systems companies for the fiber optics telecommunications market. Previously, she was a General Partner at Oak Investment Partners from 1981 to 1992, where she focused her investment activity on the semiconductor industry. Given her background, she is likely to have a very good understanding of Lam Research’s prospects, and its intrinsic value.
What caught our attention here is the size of the purchase from Ms. Lego. The fact that the insider has spent $800,000 on shares suggests she is confident the stock is set to move higher. It’s worth noting that our data shows that this is the largest insider purchase at Lam Research in several years.
Supply Chain Issues
Lam Research’s recent Q3 FY2022 results showed that the company is suffering from supply chain and cost pressures right now.
For the quarter, operating income as a percentage of revenue was 29.4%. A year earlier, it was 31.6% of revenue. Meanwhile, Non-GAAP earnings per share for the quarter came in at $7.40 per share, versus $7.49 a year earlier, despite the fact that revenue was up 6% year on year. The company described the supply environment as “extraordinarily difficult.”
However, management was confident that earnings growth will pick up when cost pressures moderate.
“We are focused on resolving our supply issues as quickly as possible to support strong customer demand. We remain confident in the secular drivers of wafer fabrication equipment investment as well as Lam's leadership position and expect to return to solid growth as industry constraints ease,” said President and CEO Tim Archer.
In light of this statement from the CEO, we see the insider buying here as bullish. It suggests that the board member sees value on offer at present, and that she expects the stock to bounce back as supply chain challenges moderate.