Cluster buying is a particularly powerful insider transaction signal. If multiple insiders have the confidence to buy company stock, it can be a strong indication that the stock is undervalued.
In this report, we are going to highlight cluster buying at Progress Software Corp (PRGS:US). Progress Software is a technology company that specializes in application development and digital experience technologies. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $1.7 billion.
Progress Software Corp: insider buying
Form 4 filings show that three insiders at Progress Software have purchased company stock so far in October. On 1 October, both CEO Yogesh Gupta and CFO Anthony Folger purchased PRGS stock. Then, on 5 October, board member Rainier Gawlick purchased stock. Combined these insiders spent around $240,000 on PRGS stock in the space of just a few days.
Source: 2iQ Research
This pattern of cluster buying looks interesting for a couple of reasons. Firstly, two top-level insiders have purchased stock – the CEO and the CFO. These insiders are likely to have deep insight in relation to the company’s operations and near-term prospects.
Secondly, our records show that insiders at Progress Software don’t buy stock very often. These three insider purchases represent the largest amount of insider buying at Progress Software for a number of years. This suggests the stock could be worth a closer look right now.
Progress Software posted a good set of third-quarter results in late September. For the period, revenue increased 3% year-over-year and non-GAAP diluted earnings per share rose 4%. Meanwhile, the company raised its guidance for the full year.
“I am very pleased with our financial and operating results in the third quarter,” said CEO Yogesh Gupta. “We delivered results that were above the top end of our guidance range and raised our 2020 outlook for revenue and non-GAAP earnings per share.”
In light of the raised guidance, we see the insider buying at Progress Software as a bullish signal. It suggests that insiders are confident about the future and that they see the stock as undervalued right now.