Should You Invest In These 4 Stocks That Insiders Are Buying?
There are many strategies to find the best stocks to buy. Some investors hunt for value stocks with strong fundamentals or look for unusual volumes. Others simply prefer to “follow the money”, which means that they focus on insiders buying up shares. Seeing where these insiders bet their money has become an increasingly common strategy for many retail investors in the stock market today.
With so many new traders in the stock market right now, research strategies too have changed a bit. We need to understand that change is constant, and we need to adapt accordingly if you’re hoping to beat the market. Performing fundamental analysis alone may still get you the returns you want, but by following the money, you could have a slight edge on other novice traders. After all, insiders could be in a better position to beat the market as they have a clearer understanding of the underlying business.
For instance, Netflix‘s (NASDAQ: NFLX) CEO Reed Hastings accumulated more shares after the company’s latest quarterly earnings. Notably, Hastings bought 50,000 shares of NFLX stock worth $20 million. Such action may signal that the post-earnings sell-off was an overreaction. Of course, even if insiders are bullish, there is no guarantee that a particular stock will go up. Now that we’ve got the basics covered, let’s take a look at some of the tech stocks that insiders have been buying.
Tech Stocks To Watch Right Now
- Asana Inc. (NYSE: ASAN)
- DocuSign Inc. (NASDAQ: DOCU)
- Toast Inc. (NYSE: TOST)
- Luminar Technologies (NASDAQ: LAZR)
Starting us off today is Asana, a leading work management platform that helps teams orchestrate their work. For the most part, the platform adds structure to unstructured work, creating clarity, transparency, and accountability for organizations. It boasts more than 100,000 paying customers and millions of free organizations across 190 countries. In fact, two of its notable clients include Amazon (NASDAQ: AMZN) and Japan Airlines. They rely on Asana to manage everything from company objectives to digital transformation and product launches.
Over the past month, ASAN stock surged over 20%. Since last June, CEO Dustin Moskovitz has bought more than $1 billion of the company’s stocks. And this buying spree has started to pick up steam in recent weeks. Moskovitz’s most recent purchase was just last week, with the CEO buying another 1.25 million Asana shares for a combined $79 million.
According to InsiderScore, this appears to be the first time a single insider has bought more than $1 billion worth of stock in a non-buyout scenario. For a sense of scale, Asana has a market cap of about $12.1 billion. Moskovitz has now invested $1.1 billion in his own company’s stock. As Asana is set to report its earnings on March 9, will you be keeping an eye on ASAN stock?
Pandemic darling DocuSign is essentially a digital signature company. DocuSign enables companies and individuals to sign and manage contracts and agreements digitally under its DocuSign Agreement Cloud. Even in a post-pandemic world, DocuSign could be here to stay as remote work continues to be relevant given the globalization of organizations all around. Besides that, its range of products under the DocuSign Agreement Cloud also includes DocuSign Insight. In short, DocuSign Insight uses artificial intelligence (AI) to identify risks and opportunities within an agreement.
After the company reported poor third-quarter results, CEO Dan Springer bought $4.8 million worth of DOCU stocks. Springer purchased the stocks in December at prices between $138.92 and $149.15. He also put out a statement, saying that fundamentally, the company has not changed and that the company’s long-term outlook was unaffected by the pandemic.
In other news, Zoom (NASDAQ: ZM) and DocuSign announced a partnership last week. The partnership involves a feature integration that lets users review and sign documents right within a Zoom meeting. Evidently, this greatly simplifies the legal requirements and eliminates the need to meet physically. Given this key integration between the two platforms, will you be buying DOCU stock?
Toast is a point-of-sale (POS) solutions company for restaurants. The cloud-based software company provides solutions including a payment platform, contactless ordering and payroll management solutions among others. Toast has provided its services to over 40,000 customers and has helped them to become more efficient. In fact, small- to medium-sized restaurants that use Toast’s platform have outperformed competitors by 10% to 30%. Besides that, Toast also claims that its platform reduces third-party delivery commissions by up to 80%.
On January 31, hedge fund 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. It’s worth noting that HMI has discretionary assets under management of over $4 billion. And on average, the hedge fund holds a position in its portfolio for under 5 quarters. This could possibly suggest that HMI sees an upside in TOST stock within this year or next.
Last week, Toast reported its fourth-quarter results. For starters, revenue grew 111% year-over-year to $512 million. As for its annualized recurring run-rate (ARR), it grew by 74% to $568 million. Besides that, gross payment volume (GPV) for the quarter increased by 125% to $17 billion. All things considered, do you think TOST stock is a buy?
Luminar is a developer of advanced sensor technologies that cater to the AV industry. It operates through two business segments, Autonomy Solutions, and Component Sales. On one hand, its Autonomy Solution segment is responsible for the manufacturing and distribution of commercial lidar sensors. Meanwhile, its Component Sales segment focuses on the business of developing ultra-sensitive pixel-based sensors.
Towards the end of January, Luminar CEO Austin Russell bought up 65,000 shares of LAZR stock at an average price of $13.78. This purchase amounted to a total of roughly $895,000. Besides the CEO, other Luminar insiders seem to be bullish on the company as well. In the past year, there have been 29 open market buys that account for about 14.5 million shares.
On January 20, the company announced a partnership with Mercedes-Benz to accelerate the development of driving technologies for Mercedes cars. Luminar’s Iris lidar technology is expected to improve vehicle safety and the technical capabilities of highly automated driving systems. Accordingly, the partnership represents a major commercial win for Luminar. Given this promising partnership and upcoming earnings release, will you be watching Luminar stock?