An insider's decision to purchase shares in their own company is certainly a promising move in the financial landscape. However, the bullish sentiment becomes more compelling when a phenomenon known as 'Cluster buying' unfolds. It's when three or more insiders within a company simultaneously choose to invest in their organization's stock during a given time frame.
Last month, our team of analysts at 2iQ identified three instances where this exact phenomenon occurred, with multiple insiders making substantial purchases of their company's shares.
Zebra Technologies Corp (ZBRA:US)
With a current Market Cap of around $14.1 billion, Zebra Technologies is a technology firm that produces RFID printers among other Communication services. Analysts found that three insiders at Zebra stocked up on ZBRA shares from August 3 and August 7:
Executive Chairman (and former CEO) Anders Gustafsson bought 4,100 shares.
CEO William Burns bought 1,000 shares.
Director Richard Keyser bought 1,000 shares.
In a nutshell, all three insiders were trading when the stock price ranged between $246.39 and $249.49. Since the first buy on August 3, ZBRA stock has been up by almost 10.58%.
2023 has so far been a lukewarm year for technology stocks and Zebra’s stock only rose by almost 6.05% YTD. On August 1, the company disclosed its earnings for Q2 2023. Despite a significant decrease in net sales year-on-year, Zebra achieved a net income of $144 million and benefited from diverse revenue streams.
Danske Bank AS (DANSKE:DC)
Trading on the Copenhagen Stock Exchange, Danske Bank AS caters to a variety of Clients in Europe and the UK. The Bank currently possesses a Market Cap of nearly DKK 133.4 billion and is based in Denmark. From July 21 and July 24, three insiders bought DANSKE stock:
CEO Carsten Egeriis stocked up on 6,025 shares.
Chairman Martin Blessing added 3,000 shares to his holdings.
Board member Jacob Dahl purchased 6,208 shares.
Investing between DKK 160.95 and DKK 165.55, all three insiders come from years of experience in the finance field. Stock price wise, DANSKE stock has risen by almost 56.55% in the past year.
Sabre Corp (SABR:US)
Another company that saw its insiders stocking up was technology company Sabre Corp which provides solutions for the travel industry. On August 8 and 9, three of Sabre company members acquired SABR shares:
President/CEO Kurt Ekert stocked up on 100,000 shares.
CFO Mike Randolfi bought 50,000 shares.
Chief Legal Officer Ann Bruder acquired 25,000 shares.
With a combined investment of around $935,000, what's interesting is that only the top-level insiders placed their bets. The CEO, CFO, and Chief Legal Officer are all likely to have deep insights into the company’s operations and prospects.
Cluster buying serves as a valuable tool to pinpoint potential investment prospects and can often prove to be quite helpful in making planned financial decisions.
To read more on these, see the 2iQ blog.