Insider transaction activity can provide powerful insight into a stock’s future potential. But not all insider trades are created equal. Identifying the most meaningful insider activity is as much art as it is science.
Today, we are going to highlight some interesting insider buying at Upwork (UPWK:US). Upwork is an online company that operates an employment marketplace. Through its platform, it enables businesses to hire highly-skilled freelancers from a number of industries. The stock is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $1.8 billion.
Insider buying: $8 million purchase
The insider transaction activity at Upwork that looks interesting is a series of purchases from Board Member Greg Gretsch. According to Form 4 filings, the insider made four purchases between 7 August and 11 August. In total, Gretsch purchased 547,844 Upwork shares, spending $8.1 million on stock. His transactions are listed below:
- 7th August: 100,000 shares @ $14.76
- 7th August: 125,944 shares @ $14.79
- 10th August: 221,900 shares @ $14.95
- 11th August: 100,000 shares @ $14.03
Source: 2iQ Research
This insider buying activity is worth taking note of for a few reasons.
Firstly, Gretsch is a founding partner and managing director of Jackson Square Ventures – a venture capital firm that specialises in Series A financings for SaaS and marketplace start-ups in anti-hype industries. He knows the industry well. His purchases – which have increased his position size significantly – suggest that he believes Upwork is set for substantial growth.
Secondly, the last time Gretsch purchased Upwork shares, in May 2020, the stock shot up around 70% in the next three months. In other words, his previous purchases were timed very well.
Strong Q2 revenue growth
Upwork reported strong revenue growth in its second-quarter results, issued on 4 August. For the quarter, revenue was up 19% to $87.5 million. This was well above the consensus estimate of $80.3 million.
However, the stock has pulled back since the Q2 results as the market was unimpressed with Q3 guidance. Gretsch clearly believes that this pullback is a buying opportunity. We see this large insider buy as a bullish signal.