If multiple insiders are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight some recent cluster buying at Parsons Corp (PSN:US). Parsons Corp is a provider of technology solutions to the defense, intelligence, and critical infrastructure markets. Operating at the nexus of critical infrastructure and national security, it provides solutions that connect communities, reimagine physical infrastructure, increase sustainability and health, and protect the world from threats across land, sea, space, air, and cyber. It is listed on the New York Stock Exchange and currently has a market capitalization of $3.2 billion.
Parsons Corp: Insider Buying
Our data shows that between December 15 and December 16, three insiders at Parsons purchased stock. Those who bought shares were:
- President & CEO Carey Smith (10,000 shares @ $30.93 per share)
- CFO George Ball (30,000 shares @ $31.25 per share)
- Chief Legal Officer Mike Kolloway (6,000 shares @ $31.74 per share)
Combined, these insiders spent about $1.44 million on Parsons stock.
This cluster buying pattern is worth highlighting for several reasons. Firstly, all three of the insiders in the cluster are top-level C-suite insiders. These insiders are likely to have an excellent understanding of the company’s financials and prospects.
Secondly, the insiders have spent a considerable amount of money on stock. Our data shows that these purchases represent the largest amount of insider buying at Parsons within a quarter since early 2020. Our Insider Model views this trading activity as bullish.
Parsons recently posted a solid set of Q3 results.
While revenue for the quarter was down 5% year on year at $956 million, it was up 9% on Q2 2021. Meanwhile, operating income was up 97% on Q2 2021 due to an increase in business volume on existing contracts and recent contract awards, and a reduction in write downs.
During the quarter, Parsons landed five new contrasts worth over $100 million each. It also authorized and began executing a $100 million share repurchase program.
“Overall, we had a good third quarter as we delivered on the strategic and financial objectives we established at the conclusion of the second quarter. We reported strong sequential total and organic revenue growth of 9% and 7%, respectively, won a number of significant contract awards, increased hiring activity, delivered strong program execution and reported solid margins in our core businesses,” commented President & CEO Carey Smith.
Looking ahead, management was optimistic about the future. “As I look forward, I remain excited about our prospects. We are well positioned across two large, attractive, and growing markets, as evidenced by our performance in the quarter. We have solidified our core business with recent recompete wins, hired key talent to drive future growth, and reported record backlog. We remain confident in our ability to achieve our 2021 guidance and believe the momentum we are seeing across both segments will continue to build as we move through Q4 and into 2022,” said Mr. Smith.
In light of this confidence from management, we see the insider buying here as a bullish indicator.