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- The 1 Reason Insiders Buy Stock
Insiders can sell shares of stock for a million reasons. Sales can be used to fund their lifestyle, some are diversifying assets, and sometimes they’re selling because they don’t think the business they’re running is a good value.
Insiders only buy for one reason.
They’re bullish on the company’s stock.
Two recent insider buys in the Asymmetric Portfolio shouldn’t go unnoticed.
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Zillow’s $100 Million Insider Buy
You may not know the name Jay Hoag, but he’s a big deal in the investing world. He co-founded TCV, which has $21 billion in assets under management, is a board member for Netflix, Peloton, and TripAdvisor, and has been a member of Zillow’s Board of Directors since 2005.
It’s fair to say Hoag has the inside scoop on technology.
That’s why TCV’s $100 million acquisition of Zillow stock earlier this month is notable.
Even for Hoag, that’s a big bet on Zillow. What does he know that makes him so bullish? We don’t know, but we can see what his actions say about his thoughts on the stock.
SoFi’s CEO Doubles Down
Last week, SoFi CEO Anthony Noto put $199,000 of his own money to work buying shares of SoFi.
On top of that, he converted 960,346 restricted stock units that had vested into common stock. The disposition of 506,585 shares you see is to pay taxes. Net, Noto’s common stock interest rose 453,761 shares because of this transaction.
Insiders often sell their RSU shares immediately because it’s part of their compensation. Noto is keeping the shares earned after taxes, which is notable as the CEO.
What’s even more important is that he’s buying shares on top of the RSUs.
Insider Buys and a Long-Term Thesis
Insider transactions aren’t the only factor investors should look at to form an investment thesis, but big sales should be a red flag and big buys deserve more investigation.
In the case of both of these stock purchases, they’re notable because of the information the buyers have in relation to the company’s strategy and operations. If investors on the board of directors or who are running the company are bullish, I see that as a reinforcement of my long-term thesis in the stock.
Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.
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