Defying bad news, several chief executive officers bought their own companies’ stock last month. Here are four cases that caught my eye.
At Skyworks Solutions Inc. (SWKS), CEO Liam Griffin spent just over $1 million to buy 11,142 shares. That brings his total holding to 153,431 shares, worth more than $14 million as of May 31.
A semiconductor maker, Skyworks specializes in chips for mobile devices, especially smartphones. Its customers have included Apple Inc. (AAPL), Amazon.com Inc. (AMZN) Samsung Electronics Co., and Microsoft Corp. (MSFT).
Apple is the biggest customer, and Skyworks has been criticized for over-dependence on Apple. That’s a valid criticism, but far from a fatal one in my view.
Skyworks has grown its revenue at an 11.6% annual clip in the past decade. But in the past year, revenue fell (coincidentally) 11.6%. Investors have to gauge which result is more indicative of the future.
Griffin is apparently on the optimistic side of that choice. He has been with Skyworks for many years and has frequently sold shares acquired as executive compensation. Last month’s buy was his first open-market purchase since 2006.
Skyworks stock seems reasonably priced at 15 times the earnings analysts expect for the fiscal year in progress.
Globe Life
Globe Life Inc. (GL) shares took a 53% dive on April 11, on a negative report by Fuzzy Panda Research. Fuzzy Panda, which held a short position in the stock (betting on a decline) alleged that Globe was guilty of insurance fraud.
Fuzzy Panda alleged that Globe Life has sold life insurance policies to dead people and fictitious people. It also alleged that Globe Life executives secretly had an ownership stake in Xcel Testing, and directed recruits to Xcel to prepare for licensing examinations.
Globe Life responded that Fuzzy Panda’s report was “wildly misleading” and painted a picture of the company that “is deliberately false.” It said the report “mischaracterizes facts and uses unsubstantiated claims and conjecture.”
The company has co-CEOs, James Darden and Frank Svoboda. Both of them bought shares in May, as did two other company executives. In addition, four directors bought shares in April, about two weeks after the short seller’s attack.
Bloomberg News on April 12 described Fuzzy Panda as “an anonymous organization. I’m skeptical that the short seller’s attack is accurate. Accordingly, I think the stock is a speculative buy, but I wouldn’t put more than 1% of your portfolio in it.
Globe Life shares fell from more than $120 early this year to just below $50 when the short seller’s report hit. It has climbed back to about $83.
Oxford Lane
Oxford Lane Capital Corp. (OXLC) is a closed-end investment company that invests in collateralized loan obligations. CEO Jonathan Cohen spent $25 million in May to greatly increase his stake. President Saul Rosenthal made an identical investment.
These two executives) are attempting to shore up a company that has posted four losses in the past ten years. The dividend yield is gigantic, at about 17% a year, and dividends are paid monthly. A dividend that large is a danger sign, but may also be an opportunity.
Acacia Research
Acacia Research Corp. (ACTG) is bafflingly diverse for a small company. One segment makes printers and supplies for industrial printing. Another explores for and produces oil and gas. A third acquires and manages patents.
The company has lost money in six of the past ten years. Over that time, the stock has lost 65% of its value. Nonetheless, CEO Martin Mcnulty and general counsel Jason Soncini bought shares in May. These were the first insider buys since 2021.
The Record
The column you’re reading is the 70th one I’ve written about insider purchases and sales. I’m missing some data for the first six, but can tabulate 12-month results for 60 columns – all those from 1999 through a year ago.
The stocks I’ve recommended based on insider buys have beaten the Standard & Poor’s 500 Total Return Index by an average of 0.4 percentage points.
When insiders bought, but I suggested avoiding the stock, the average result trailed the S&P 500 by 24 percentage points.
On stocks where I discussed insider sales, the average result was two percentage points below the index.
On a few stocks, I noted buying by company executives but made no comment or an ambiguous one. Perversely, this group beat the benchmark by 16 percentage points.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
Disclosure: I own Apple personally and for most of my clients. Katharine Davidge, my wife and a portfolio manager at my firm, owns Microsoft personally and for her clients.
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