5 Stocks Insiders Are Buying Amid a Tech Stocks Rout: NFLX, YOU, VZ

Many investors love to track which stocks insiders are buying, and for good reason. Insiders beat the market by more than 11% annually.

Even though you’re likely not an insider yourself — a director or senior officer of a publicly traded company or a 10% owner — there’s still a reason for you to care. Why? As famed investor Peter Lynch once said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise.”

Insider buying lets you take a look into the mind of executives and directors who are closest to the company. Logically, an insider wouldn’t buy shares if they believed that the price would fall in the long term.

Following in their footsteps (or filings) therefore gives you a chance to outperform the market alongside CEOs and massive institutions.

With that in mind, let’s take a look at five stocks that insiders have been buying recently.

  • Netflix (NASDAQ:NFLX)
  • Toast (NYSE:TOST)
  • Luminar Technologies (NASDAQ:LAZR)
  • Verizon (NYSE:VZ)
  • Clear Secure (NYSE:YOU)

Stocks Insiders Are Buying: Netflix (NFLX)

Netflix is first on the list of stocks insiders are buying.

After reporting unsatisfactory earnings earlier this month, NFLX stock plunged by over 20%. While revenue was in line with consensus estimates and earnings per share (EPS) beat consensus estimates, new paid subscriber guidance is what really hurt Netflix. The streaming giant estimated Q1 new paid subscribers to be 2.5 million, which missed the consensus estimate of 6.93 million new paid subscribers by a wide margin.

To address the miss, Netflix explained that rising competition from other streaming services, such as HBO Go and Disney’s (NYSE:DIS) Disney+, has picked up, and that rising competition is a major company risk. However, Netflix “continue[s] to grow in every country and region in which these new streaming alternatives have launched.”

Now, Netflix’s CEO is taking advantage of the price drop and buying shares.

In a Form 4 received by the Securities and Exchange Commission (SEC) on Jan. 28, Reed Hastings purchased 50,000 shares of NFLX stock worth $20 million. The shares were purchased for prices ranging from $375 to $393 per share. Netflix is currently trading above $400, so Hastings is sitting on a timely gain. Hastings’ recent buy was also the largest insider purchase of Netflix in the past year. Investors should note that the shares were purchased through Hastings’ family trust.

Hastings isn’t the only prominent figure to have recently purchased Netflix. On Jan. 26, Bill Ackman announced that his hedge fund, Pershing Square, had purchased 3.1 million shares of NFLX stock. The purchase amounted to well over $1 billion, making Pershing Square a top-20 shareholder of Netflix. Ackman explained that Netflix’s recent price decline due to Q4 earnings allowed him to purchase Netflix “at an attractive valuation.”

Toast (TOST)

Toast is a point-of-sale solutions company for restaurants. The cloud-based software company serves to provide its over 40,000 customers with a reliable payment platform, contactless ordering solutions, and payroll and team management solutions. Additionally, Toast claims that it helps restaurants become more efficient. The official website states that small- to medium-sized restaurants using the Toast platform have outperformed their peers by 10% to 30%. Furthermore, it claims that its platform reduces third-party delivery commissions by up to 80%.

During Q3, the company reported revenue of $486.4 million, which was up an impressive 105% year over year (YOY). Additionally, gross payment volume (GPV) grew by triple digits as well, up 123% YOY to $16.5 billion. Toast’s Q3 earnings were helped by Covid-19, as more customers opted for contactless ordering and food delivery.

Now, a hedge fund appears to be taking notice of Toast’s growth potential.

Based on a Form 4 received by the SEC on Jan. 31, HMI Capital Management purchased 718,011 shares of TOST stock at prices ranging from $19.86 to $19.97. After the purchase, HMI Capital now owns just over 11 million shares of Toast, making the hedge fund a 10% owner.

HMI is based in San Francisco and has discretionary assets under management (AUM) of $4.17 billion. On average, a position is held in its portfolio for 4.5 quarters. This could possibly suggest that HMI sees upside in TOST stock within the next year.

Stocks Insiders Are Buying: Luminar Technologies (LAZR)

Luminar operates as an autonomous vehicle sensor and light detection and ranging (LIDAR) company. The $5 billion company provides its products to a variety of businesses in the automotive industry. Furthermore, Luminar offers two LIDAR systems. The first, called Hydra, is meant for “testing and development programs.” The second system, called Iris, is expected to be Luminar’s flagship product.

Iris is a roofline sensor that is designed for long ranges and all weather conditions. It’s also the “most advanced lidar solution for series-production autonomy.” With a camera resolution of more than 300 points per square degree, Iris can detect and analyze objects at long distances that the human eye may miss. Furthermore, Volvo has confirmed that Luminar will supply Iris sensors for its next-generation XC 90 sedan, which is expected to enter production this year.

There’s no one closer to Luminar’s developments than its CEO, who recently picked up shares as part of a prearranged 10b5-1 plan.

On Jan. 21, Luminar president and CEO Austin Russell picked up 65,000 shares of LAZR stock at an average price of $13.78. In total, the purchase amounted to roughly $895,000. So, are other insiders of Luminar bullish? In the past year, Luminar insiders have made 29 open market buys and eight sells. Those transactions account for insiders buying 14.5 million shares and selling 23 million shares. Before panicking, investors should be noted that a majority of the selling can be attributed to Russell, who sold 10.5 million shares at $21 per share last July.

Verizon (VZ)

Verizon is one of the largest telecommunication providers in the U.S. and serviced over 115.4 million retail connections through its consumer group last year. Furthermore, its business group added on an additional 27.4 million retail connections. In 2021, Verizon generated revenue of $133.6 billion and also provided service for over 99% of Fortune 500 companies.

The telecommunications giant is currently in the process of expanding U.S. 5G coverage. In addition, Verizon recently received approval from the Federal Aviation Administration (FAA) to safely turn on 5G towers without disrupting airline communications. In January, Verizon turned on 5,100 towers, with the ability to turn on an additional 2,000 towers this month. As of Feb. 1, Verizon has provided 5G coverage to over 100 million people, with plans to “exceed that goal.” With the increased implementation of 5G coverage, Verizon’s CEO is taking notice.

According to a Form 4 received by the SEC on Jan. 28, CEO Hans Vestberg purchased 19,000 shares of VZ stock at an average price of $52.55 per share. In total, the purchase amounted to roughly $1 million. After the purchase, Vestberg now owns 149,764 shares of VZ stock. Vestberg’s purchase represents the only insider purchase in the past year, while other insiders sold 426,910 shares of VZ stock. Adding on to that, VZ stock is down about 3% during the past year. Could 2022 possibly be a turnaround year?

Stocks Insiders Are Buying: Clear Secure (YOU)

Last on the list of stocks insiders have been buying is Clear Secure.

Clear Secure operates as a biometric verification company that provides its products to public places with a need for security, such as airports or sports stadiums. For example, users of Clear Secure’s touchless IDs can scan their ID at an airport and skip the long check-in lines.

Clear Secure also offers Health Pass, which allows users to store proof of vaccinations and other healthcare information on the Clear Secure app. However, the company currently operates in only roughly 50 locations across the U.S. As a result, Clear Secure’s growth potential may face location limits.

Regardless of these challenges, a $13 billion hedge fund remains bullish on YOU stock.

On Feb. 1 and Feb. 2, Durable Capital Partners purchased 289,471 shares of Clear Secure. The hedge fund purchased the shares at prices ranging from $24.15 to $25.52. In fact, Durable has purchased YOU stock six times now this year, exemplifying its bullish stance. After the purchase, the fund now owns a whopping 9.3 million shares, which makes it a 10% owner.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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