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Insider Watch: 2 CEOs Buying Shares

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By monitoring insider activity, investors can gain insights into management's confidence in the company's direction and prospects.

And, of course, insiders have more in-depth knowledge about the company's operations, financials, and current standing. If they weren’t confident, why would they buy?

Recently, insiders of two companies – CVS Health (CVS - Free Report) and Akamai Technologies (AKAM - Free Report) – have been busy scooping up shares. What did the insiders see? Let’s take a closer look.

CVS Health

In early May, CEO Karen Lynch purchased approximately 14,000 CVS shares, with the transaction totaling nearly $1 million.

CVS shares aren’t expensive, with the current 7.7X forward earnings multiple sitting nicely beneath the 9.9X five-year median and the Zacks Retail and Wholesale sector average.

The stock carries a Style Score of “A” for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, shares pay a solid dividend, currently yielding 3.6% annually with a sustainable payout ratio of 28% of earnings. The payout has grown by a modest 2.7% over the last five years.

Zacks Investment Research
Image Source: Zacks Investment Research

The purchase comes on the heels of a better-than-expected quarterly print; CVS exceeded the Zacks Consensus EPS Estimate by 8% and delivered a 4.5% revenue surprise in its latest release on May 3rd.

Akamai Technologies

Akamai Technologies is a global provider of content delivery networks and cloud infrastructure services. Frank Leighton, CEO, has been on a big purchasing spree, buying roughly $200 thousand of AKAM shares just in May.

The stock presently sports a favorable Zacks Rank #2 (Buy), with earnings expectations modestly increasing across nearly all timeframes.

Zacks Investment Research
Image Source: Zacks Investment Research

AKAM shares got a solid boost in its latest release post-earnings, as we can see illustrated by the green arrow circled in the chart below.

Zacks Investment Research
Image Source: Zacks Investment Research

Regarding the mentioned quarter, the company posted a double-beat, exceeding the Zacks Consensus EPS Estimate by 6% and posting a marginal revenue surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Insiders have a longer-term holding horizon than most, a critical aspect that market participants should know. Nonetheless, seeing an insider step in and buy is always reassuring.

That’s precisely what the CEOs of both companies above – CVS Health (CVS - Free Report) and Akamai Technologies (AKAM - Free Report) – have done recently.


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