If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.
In this report, we are going to highlight a cluster buying pattern at Zebra Technologies Corp (ZBRA:US). Zebra is an American company that specializes in automatic identification and data capture (AIDC) solutions. Its products include barcode scanners, printers, and rugged computing devices. The company is listed on the Nasdaq and currently has a market cap of around $13.0 billion.
Our data shows that between August 3 and August 7, three insiders at Zebra Technologies bought stock. Those who bought shares were:
Executive Chair (and ex-CEO) Anders Gustafsson (4,100 shares @ $246.39 per share)
CEO William Burns (1,000 shares @ $249.40 per share)
Director Richard Keyser (1,000 shares @ 248.85 per share)
Combined, the three insiders invested around $1.5 million in the company.
This cluster buying pattern is notable for several reasons.
Firstly, several top-level insiders have purchased stock. Generally speaking, stock purchases from top-level insiders are more informative than stock purchases from insiders lower down the corporate hierarchy.
Secondly, the three insiders have invested a considerable amount of money in the company. Our Insider Model views this buying activity as bullish.
Buying the Dip
Zebra’s share price recently took a hit after the company posted poor results for Q2.
For the quarter, sales were down 17% year on year due to softening demand in the retail and logistics end markets.
Meanwhile, the company cut its full-year guidance, stating that it now expects net sales to fall 20-23% year on year versus previous guidance of a 2-6% fall.
However, management was confident in relation to the long-term story.
“We remain confident in our ability to benefit from the long-term secular megatrends to digitize and automate workflows. We are taking action to drive sales and enhance profitability, which we believe will position us for success in the current environment and in the future. With the incremental cost and restructuring actions announced today, we expect to improve profitability as our end markets recover,” said CEO Bill Burns.
In light of this confidence in the long-term growth story, we see the insider buying here as a bullish development. Clearly, the insiders expect the stock to bounce back.