Insider buying can provide valuable trading signals. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to rise.
In this report, we are going to highlight a large insider buy at Marvell Technology Inc (MRVL:US). Marvell is a leading semiconductor company that offers solutions for a range of industries including data center, carrier infrastructure, enterprise networking, consumer, and automotive/industrial. It is listed on the Nasdaq and currently has a market cap of $41.27 billion.
Insider buying at Marvell Technology
Our data shows that on September 2, Marvell board member Michael Strachan purchased 6,781 shares at a price of $46.32 per share. This trade cost the insider $314,096 and increased his holding to 36,389 shares.
This trading activity is worth highlighting due to the fact that Mr. Strachan – who has served on Marvell’s board since May 2016 and has also served on the board of LSI Logic – has made well-timed stock purchases in the past. Our data shows that the insider last bought stock in late 2018, when tech stocks were under pressure and Marvell was trading near $15. Since then, Marvell’s share price has risen as high as $94.
Additionally, this is a large purchase on a relative basis. Our records show that this trade represents the largest insider purchase at Marvell in over three years.
Long-term growth story
Marvell stock – like most semiconductor stocks – has experienced weakness this year on the back of rising interest rates and recession fears. Year to date, the stock is down about 45%.
However, the company continues to grow at a healthy rate. In the second quarter of fiscal 2023, it delivered record revenue of $1.52 billion, up 41% year on year, and up 5% sequentially. And looking ahead to Q3, the company expects to generate revenue of $1.56 billion (+/- 3%), which would represent year-on-year growth of about 29%. It noted that it expects sequential revenue growth to accelerate in the fourth quarter as supply constraints begin to ease.
Looking further out, the group expects to benefit from a number of long-term, secular growth trends. “We believe we are well positioned to continue to benefit from our favorable end market exposure tied to strong secular growth trends and significant expected upcoming revenue contributions from a number of Marvell-specific product ramps," said Matt Murphy, Marvell's President and CEO, in the company’s recent Q2 results.
In light of this confidence in the long-term growth story, we see the insider buying activity here as a bullish indicator.