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Investors closely follow insider buys, and for a very valid reason – they’re generally a good indicator of a company’s health. After all, if an insider is selling, why would an investor want to buy?
Further, what even is an insider? An “insider” is defined by Section 16 of the Security Exchange Act as an officer, director, 10% stockholder, or anyone who possesses information because of their relationship with the company.
Simply put, insiders are typically those with a high-profile nature within the company.
Of course, many strict rules apply to insiders.
They can’t trade based on material nonpublic information, they must pre-clear all trades, and all trades of the company’s stock must occur during the Window Period; the Window Period opens on the second trading day following the company’s quarterly or annual earnings release and closes 20 days later.
Additionally, insiders are prohibited from selling short and trading, writing, or purchasing “put” or “call” options on the company’s stock whether or not such options are traded on an exchange.
Finally, insiders must disclose purchases, sales, and holdings of their company's securities by filing SEC Forms 3, 4, and 5.
Insiders have bought many stocks throughout 2022, including Fiserv , Caterpillar (CAT - Free Report) , and Broadcom (AVGO - Free Report) . Below is a chart illustrating the share performance of all three companies YTD with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each company.
Caterpillar
Caterpillar (CAT - Free Report) is the world’s largest construction-equipment manufacturer. The company designs, develops, engineers, manufactures, markets, and sells machinery, engines, financial products, and insurance to customers.
A director of CAT, David MacLennan, has purchased CAT shares twice this year, once in February and once in May. Together, his purchase totaled 1000 shares for an overall cost of approximately $230,000.
Caterpillar’s projected growth could be seen as a big reason for the purchase – earnings are forecasted to climb 12.3% in FY22 and an additional 6% in FY23.
Image Source: Zacks Investment Research
Further, Caterpillar has consistently posted strong bottom-line results, exceeding the Zacks Consensus EPS Estimate in nine consecutive quarters. In its most recent print, the construction equipment titan penciled in a 6% bottom-line beat.
To top it off, the company is part of the elite Dividend Aristocrat Group - Caterpillar’s annual dividend yields a sizable 2.6%, much higher than its Zacks Industrial Products Sector average.
In addition, the company’s payout ratio sits at a sustainable 39%, paired with a five-year annualized dividend growth rate of a notable 8.9%.
Image Source: Zacks Investment Research
Broadcom
Broadcom (AVGO - Free Report) is a premier designer, developer, and global supplier of a broad range of semiconductor devices focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V based products.
In March of this year, Raul Fernandez, a director of AVGO, purchased a total of 168 shares with a total transaction value of roughly $98 thousand.
AVGO’s bottom-line growth could be seen as a significant reason for the purchase – Broadcom’s bottom-line is forecasted to expand by a substantial 20% in FY22 and a further 5% in FY23.
Image Source: Zacks Investment Research
In addition, Broadcom has been on a jaw-dropping earnings streak; the company hasn’t reported quarterly EPS under the Zacks Consensus EPS Estimate dating back to 2012. Just in its latest print, AVGO recorded a 4% bottom-line beat.
For those seeking an income stream, Broadcom’s got that covered with its sector-beating annual dividend yield of a steep 3.2% paired with a remarkable 30% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Fiserv
Fiserv is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale.
Throughout May and June earlier in the year, an insider, ValueAct Holdings L.P., went on a big buying spree, purchasing a whopping total of roughly 1.6 million Fiserv shares.
When trying to understand the purchases, one could look at the company’s growth projections – for Fiserv’s current fiscal year (FY22), earnings are forecasted to climb 8.7%. And in FY23, the bottom-line looks to add an additional 7%.
Image Source: Zacks Investment Research
In addition to solid bottom-line growth, Fiserv has consistently surpassed quarterly estimates, exceeding the Zacks Consensus EPS Estimate in eight consecutive quarters. Just in its latest print, FISV penciled in a 1.3% bottom-line beat.
Bottom Line
When scouting for new investments and keeping tabs on current ones, tracking insider buys is a great way to gauge a company’s health.
If a high-profile insider is selling, it raises many questions. The inverse is also true – if a high-profile insider is buying, why? It could be for only one reason – they anticipate the stock price appreciating.
Of course, there are strict rules surrounding insider buying, and for obvious reasons.
An insider can’t trade on material nonpublic information, as it would give them a massive advantage with widespread legal effects. In addition, they can't short-sell and have a Window Period for any transactions.
All three stocks above – Broadcom (AVGO - Free Report) , Caterpillar (CAT - Free Report) , and Fiserv – have all witnessed insider activity in 2022.
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3 S&P 500 Companies With Insider Buys in 2022
Investors closely follow insider buys, and for a very valid reason – they’re generally a good indicator of a company’s health. After all, if an insider is selling, why would an investor want to buy?
Further, what even is an insider? An “insider” is defined by Section 16 of the Security Exchange Act as an officer, director, 10% stockholder, or anyone who possesses information because of their relationship with the company.
Simply put, insiders are typically those with a high-profile nature within the company.
Of course, many strict rules apply to insiders.
They can’t trade based on material nonpublic information, they must pre-clear all trades, and all trades of the company’s stock must occur during the Window Period; the Window Period opens on the second trading day following the company’s quarterly or annual earnings release and closes 20 days later.
Additionally, insiders are prohibited from selling short and trading, writing, or purchasing “put” or “call” options on the company’s stock whether or not such options are traded on an exchange.
Finally, insiders must disclose purchases, sales, and holdings of their company's securities by filing SEC Forms 3, 4, and 5.
Insiders have bought many stocks throughout 2022, including Fiserv , Caterpillar (CAT - Free Report) , and Broadcom (AVGO - Free Report) . Below is a chart illustrating the share performance of all three companies YTD with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each company.
Caterpillar
Caterpillar (CAT - Free Report) is the world’s largest construction-equipment manufacturer. The company designs, develops, engineers, manufactures, markets, and sells machinery, engines, financial products, and insurance to customers.
A director of CAT, David MacLennan, has purchased CAT shares twice this year, once in February and once in May. Together, his purchase totaled 1000 shares for an overall cost of approximately $230,000.
Caterpillar’s projected growth could be seen as a big reason for the purchase – earnings are forecasted to climb 12.3% in FY22 and an additional 6% in FY23.
Image Source: Zacks Investment Research
Further, Caterpillar has consistently posted strong bottom-line results, exceeding the Zacks Consensus EPS Estimate in nine consecutive quarters. In its most recent print, the construction equipment titan penciled in a 6% bottom-line beat.
To top it off, the company is part of the elite Dividend Aristocrat Group - Caterpillar’s annual dividend yields a sizable 2.6%, much higher than its Zacks Industrial Products Sector average.
In addition, the company’s payout ratio sits at a sustainable 39%, paired with a five-year annualized dividend growth rate of a notable 8.9%.
Image Source: Zacks Investment Research
Broadcom
Broadcom (AVGO - Free Report) is a premier designer, developer, and global supplier of a broad range of semiconductor devices focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V based products.
In March of this year, Raul Fernandez, a director of AVGO, purchased a total of 168 shares with a total transaction value of roughly $98 thousand.
AVGO’s bottom-line growth could be seen as a significant reason for the purchase – Broadcom’s bottom-line is forecasted to expand by a substantial 20% in FY22 and a further 5% in FY23.
Image Source: Zacks Investment Research
In addition, Broadcom has been on a jaw-dropping earnings streak; the company hasn’t reported quarterly EPS under the Zacks Consensus EPS Estimate dating back to 2012. Just in its latest print, AVGO recorded a 4% bottom-line beat.
For those seeking an income stream, Broadcom’s got that covered with its sector-beating annual dividend yield of a steep 3.2% paired with a remarkable 30% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Fiserv
Fiserv is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale.
Throughout May and June earlier in the year, an insider, ValueAct Holdings L.P., went on a big buying spree, purchasing a whopping total of roughly 1.6 million Fiserv shares.
When trying to understand the purchases, one could look at the company’s growth projections – for Fiserv’s current fiscal year (FY22), earnings are forecasted to climb 8.7%. And in FY23, the bottom-line looks to add an additional 7%.
Image Source: Zacks Investment Research
In addition to solid bottom-line growth, Fiserv has consistently surpassed quarterly estimates, exceeding the Zacks Consensus EPS Estimate in eight consecutive quarters. Just in its latest print, FISV penciled in a 1.3% bottom-line beat.
Bottom Line
When scouting for new investments and keeping tabs on current ones, tracking insider buys is a great way to gauge a company’s health.
If a high-profile insider is selling, it raises many questions. The inverse is also true – if a high-profile insider is buying, why? It could be for only one reason – they anticipate the stock price appreciating.
Of course, there are strict rules surrounding insider buying, and for obvious reasons.
An insider can’t trade on material nonpublic information, as it would give them a massive advantage with widespread legal effects. In addition, they can't short-sell and have a Window Period for any transactions.
All three stocks above – Broadcom (AVGO - Free Report) , Caterpillar (CAT - Free Report) , and Fiserv – have all witnessed insider activity in 2022.