Insider trading occurs across the capitalization spectrum and in just about every industry. Some of the most eye-opening activity takes place in the technology sector where higher volatility and a steady stream of initial public offerings (IPOs) produce a lot of activity.
Within the technology space, the most purchased names over the last 12 months may come as a surprise. Absent are mega-cap names like Facebook, Alphabet, and Oracle. In fact, these stocks have been among the most sold with controlling executives and board members largely responsible.
Instead, a collection of up-and-coming tech companies have seen the bulk of insider buying this year. This should come as good news to investors because such companies are still in the early stages of benefiting from long-run growth markets.
Over the last 12 months, more of insiders’ money has been gone to Asana, Fastly, and Upstart Holdings than any other tech stocks.
What Tech Stock Has Been Most Bought by Insiders?
Nearly 3 million shares of Asana (NYSE: ASAN) have been bought by insiders since last Halloween. In dollar terms that equates to more than $200 million of buys and far outweighs the approximately $22 million of selling that has gone on in the stock.
Since the provider of the popular work management platform went public just over a year ago, insiders have constructed a 54% ownership stake. Investors should perceive this as a good thing because it means company executives and board members have a lot of ‘skin in the game’. In other words, they are heavily invested in the success of the company and want it stock to perform well just has external investors do.
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Much of the buying has been at the hands of co-founder and CEO Dustin Moskowitz. Last month he purchased 3,833 shares at a price of $100 in accordance with a pre-established trading plan. The largest shareholder, he owns 5.2 million shares directly and has a 4.1 million share indirect interest through a trust account.
It is especially encouraging that Mr. Moskowitz has continued to buy Asana shares given the stock’s meteoric rise. It debuted on the NYSE at $27 and is currently trading around $135. Although the implied upside is limited, Wall Street remains bullish on Asana with price targets as high as $151.
Are Insiders Buying or Selling Fastly Stock?
Fastly (NYSE: FSLY) has been one of the most volatile tech stocks since the onset of the pandemic. It shot up above $130 a year ago only to slide back below $40 this past August. This type of volatility may be too much to bear for some investors but there has been an interesting underlying theme here—insiders have been very active.
In the past 12 months, there have been 55 insider buy transactions in Fastly worth almost $55 million. So, why has the stock endured such as selloff? There’s a catch. Roughly $54 million in insider sells have occurred in the same time period. In other words, insiders are selling just about every share they acquire. This makes it hard for any stock to gain any momentum in the market.
CFO Ronald Kisling was the latest to dump Fastly shares. His October 18th sale at an average price of $44.59 came a month after he acquired the shares when restricted stock units (RSUs) vested.
While it’s a positive that insiders still own 10% of the stock, an absence of sustained insider buying with the stock well off its recent highs is discouraging. The company may have good growth prospects in the digital software space, but you wouldn’t know it by all the insider ‘flipping’.
Is the Pullback in Upstart Holdings Stock a Buy?
Upstart Holdings (NASDAQ: UPST) has been living up to its name. The AI-based lending platform has produced some strong performance metrics since its December 2020 IPO and the stock has surged 700% this year. Its remarkable run was propelled by some heavy insider buying.
The most powerful insider trade took place soon after the IPO when prominent hedge fund manager Daniel Loeb took a $24 million position for the Third Point Ventures fund. It should come as little surprise then, that when Mr. Loeb shed nearly 1 million shares in August 2021, the market took notice. However, thanks to largely bullish sentiment around the stock and the fact that Mr. Loeb still sits on 12.4 million Upstart shares, this did not cause a selloff.
Conversely, Upstart stock climbed to $400 per share last month less than a year after debuting at $26. Buying here would appear to reek of performance chasing but given the stock’s recent 20% pullback and the 25% insider ownership, it may actually be a good entry opportunity.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Upstart (UPST) | $79.52 | +7.4% | N/A | -41.20 | Hold | $46.83 |
| Fastly (FSLY) | $8.14 | +3.2% | N/A | -7.47 | Reduce | $7.94 |
| Asana (ASAN) | $15.72 | -0.2% | N/A | -13.67 | Hold | $14.27 |
