Insider Buying

Insider Buying Report: STMicroelectronics NV (STM:FP)

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STMicroelectronics NV
12 months:
CFO purchase
Good Q3 results

High ranking insiders such as CFOs tend to have the most up-to-date information on their companies’ prospects. If they’re buying shares, it’s generally a positive development.

Here, we are going to highlight a large CFO purchase at STMicroelectronics (STM:FP). STMicroelectronics is a Swiss company that develops, manufactures and markets semiconductor products. It operates in EMEA, the Americas, and the Asia Pacific. It’s listed on the Euronext exchange Paris and currently has a market capitalization of €25 billion.

STMicroelectronics: insider buying

Regulatory filings show that on 23 October the CFO of STMicroelectronics, Lorenzo Grandi, purchased 18,000 ADRs at a price of $33.74 per ADR. This purchase cost the insider approximately $600,000.

     Source: 2iQ Research

Bucking the recent trend

This CFO purchase looks interesting for a couple of reasons. Firstly, this is the first insider purchase in a long time. According to our records, since the end of May there have been twenty-four insider sell orders transacted but no director purchases.

Secondly, this is a substantial purchase from the insider, which is what we like to see. Given he has been at the company for six years he is likely to have developed a deep understanding of STMicroelectronics and its fundamentals.

Strong growth

STMicroelectronics shares are currently up by around 36% year to date on the back of strong financial performances. Q3 net revenues of $2.67B were above the top-end of expectations. Market conditions were better than expected. Guidance for Q4 at the midpoint suggests there will be year-on-year net revenue growth of 4.3% and net revenues of $9.97bn.

Grandi’s purchase suggests that he believes the stock has the potential to keep rising. We see this large insider purchase as a bullish signal.