CFO purchases should not be ignored by investors. CFOs have considerable insights into their firms’ financial health and some studies have found that these insiders earn higher abnormal returns following their purchases of company shares than CEOs.
In this report, we are going to highlight a large CFO purchase at NetApp Inc (NTAP:US). NetApp is a cloud-led, data-centric software company that helps businesses get the most out of their data. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $14.4 billion.
NetApp Inc: insider buying
Form 4 filings show that on 17 December, NetApp’s CFO Mike Berry purchased 15,000 shares at a price of $63.89 per share. This purchase – which cost the insider $958,329 – increased his holding from 22,568 shares to 37,568 shares.
This insider purchase stands out for two reasons. Firstly, it is the largest insider purchase at NetApp for over two years. Secondly, it has increased the size of Berry’s holding by 66%. This suggests that he is very confident the stock is set to move higher.
Benefitting from digital transformation
NetApp recently posted a solid set of second-quarter results. For the quarter, net revenues were up 3% to $1.42 billion while billings were up 10% to $1.46 billion. Non-GAAP net income per share was $1.05, compared to $1.09 in the second quarter of fiscal year 2020. The company advised that it successfully executed its plan to scale its cloud business while growing in the storage market.
Looking ahead, management sounded confident in relation to the group’s future prospects. “We are a primary beneficiary of the increasing importance of data and are uniquely positioned to help customers with their digital transformations. I am confident in our ability to drive long-term growth, extend our hybrid cloud leadership, and deliver value for customers, partners, and shareholders,” said CEO George Kurian.
In light of these results and the confident tone from management, we see the insider buying here as bullish.