Insider transaction activity can provide powerful insights 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.
In this report, we are going to highlight some interesting insider buying at Wolfspeed Inc (WOLF:US). Wolfspeed is a global leader in silicon carbide technology. Its products include silicon carbide materials, power-switching devices, and RF devices for applications such as electric vehicles, fast charging inverters, power supplies, telecom, and military and aerospace. The company is listed on the New York Stock Exchange and currently has a market capitalization of $8.4 billion.
Wolfspeed Inc: Insider Buying
Our data shows that in May, two insiders at Wolfspeed have made large stock purchases. On May 12, President and CEO Gregg Lowe bought 4,000 shares at a price of $64.11 per share, spending $256,422 on stock. Then, on May 23, board member John Replogle bought 7,463 shares at a price of $67.65 per share, spending $511,400 on stock. Combined, the two insiders spent around $760,000 on Wolfspeed stock.
Bullish Trading Activity
This trading activity is worth highlighting for two main reasons.
Firstly, Mr. Lowe has considerable experience in the semiconductor space. Before joining Wolfspeed in 2017, he served as President and CEO of Freescale Semiconductor, a $5 billion global company with products serving automotive, industrial, consumer and communications markets. During his time at Freescale, he led the successful merger with NXP Semiconductors, creating a high-performance, mixed-signal semiconductor industry leader, with combined revenue of more than $10 billion. Before this, he spent nearly 30 years at Texas Instruments. Given his experience, he is likely to have an excellent understanding of the company’s prospects.
Secondly, Mr. Replogle – who has served on the board since 2014 – has an investment background. Since October 2017, he has served as a Founding Partner of One Better Ventures, LLC, a venture capital firm focused on consumer brands that have a positive impact.
Our Insider Model rates this buying activity as very bullish.
Wolfspeed recently posted a solid set of Q3 results.
For the period ended March 27, 2022, revenue came in at $188 million, up 37% year on year. Meanwhile, gross profit climbed to $64 million from $44 million a year earlier with gross margin rising from 32% to 34%. Net loss from continuing operations on a non-GAAP basis was $14.3 million, or $0.12 per diluted share, compared to a net loss of $24.7 million, or $0.22 per diluted share a year earlier.
"Our financial results for the quarter continue to demonstrate progress towards our corporate objectives and the further adoption of silicon carbide across a wide range of applications," commented Mr. Lowe.
Looking ahead, the group said it is expecting revenue of $200 million to $215 million for the fourth quarter of fiscal 2022. That would represent growth of 37% to 47% on revenue a year earlier.
In light of these solid results, we see the insider buying here as a bullish indicator.