CHPT - Weeks Of 9/4 9/11 And 9/18 Notable Insider Buys

2023-09-27 14:06:57 ET

Summary

• Insider transactions for the last three weeks are covered in this update.
• The week of September 4th had fewer significant insider purchases due to the Labor Day holiday.
• A discussion of insider transactions at Broadcom Inc, Virtu Financial Inc, and HighPeak Energy Inc. follows.

Overview

This update will cover insider transactions through the first three weeks of September. The week of September 4th was shortened with the markets being closed for Labor Day and consequently had not many significant insider purchases. The following two weeks also lacked in sizable insider buys, therefore, I've just combined the last three weeks of information into a single article.

The last week we covered started August 28th, and our article discussed Sirius XM Holdings Inc ( SIRI ), Lyft Inc ( LYFT ), Workday Inc ( WDAY ), and Globalstar Inc ( GSAT ). SIRI and LYFT both had a brief spike following the news their CEOs had bought shares but have since returned to the same prices as before. Likely the most interesting story out of the last article is GSAT, whose director James Monroe bought an additional $7.7 million in stock the week after he bought $4.7 million. He's now bought an est. $18 million in GSAT stock YTD.

Broadcom Inc. ( AVGO )

There have been two purchases by insiders at the semiconductor firm so far in September totaling about $10.5 million, both from directors. Harry You bought 1000 shares at an est. $858 per share on 9/15, and Check Kian Low bought 11,000 shares at around $872 a share on 9/6. AVGO stock has performed exceptionally well this year, up about 50% so far.

There were reports this month that Google ( GOOG ) (GOOGL) planned to drop ties with the chipmaker, and share prices slipped slightly, but GOOG released a statement contradicting those reports stating they had no intentions of changing their current relationship with AVGO. As for the financials and fundamentals, besides trading at a somewhat hefty premium with P/E at almost 20x, there are a lot of green flags with this stock. In 2022, they set a company record with an adjusted EBITDA margin of 63%, amounting to more than $16 billion of free cash flow and nearly 50% of annual revenue. It looks likely the company will break $35 billion in revenue this year considering they've done around $26 billion so far and Q4 guidance put revenue at $9.2 billion. Q4 guidance also likes 2023 adjusted EBITDA at 65%, so a slight jump YoY.

Virtu Financial, Inc. ( VIRT )

Insiders apparently aren't spooked by the SEC suing the financial firm for misleading customers on how securely their personal information was held by VIRT. The CEO bought 50,000 and the Co-President and Co-COO added 15,000, both on 9/13 (one day after SEC announced the lawsuit) for around $17 per share; a combined total of around $1.1 million. The company reportedly handles around 25% of all daily retail market volume, but annual revenue is likely to fall for the third straight year, a trend its peers don't entirely seem to have followed. Revenue in 2022 was down 30% from 2020. The opportunity with VIRT that many analysts have pointed out is the firm's ability to benefit from market volatility. Therefore, this makes them a likable hedge for those who feel the worst is yet to come despite the S&P 500 (SP500) falling about 5% since its late-July, early-August highs.

HighPeak Energy, Inc. ( HPK )

HPK is an independent oil and gas company primarily operating out of Texas. Their CEO is well-known industry veteran Jack Hightower. He, along with company President Michael Hollis, bought HPK shares on 9/19 for around $16.50 a share. Hightower added a half million shares and Hollis added 9,829. Several days earlier, they had closed a $1.2 billion dollar term loan which they plan on using to restructure company debt. If you look at the chart below, you can see how active insiders have been here since the beginning of the year. This includes well-known investor John Paul Dejoria who now owns about 11% of the company after he bought close to $70 million worth of shares back in July. Mr. Hollis, the President who just bought shares, has grown his position in the company by more than 450% now YTD. In total, there have been 8 different insiders buying shares since the beginning of the year.

The only other similar instance of consolidated insider buying we've seen at an energy company recently is at Energy Transfer LP ( ET ). HPK's financials are unique, the company trades at an agreeable P/E of 8.7x and their current YoY revenue growth is above 110%. However, it should be pointed out HPK's levered free cash flow margin for the trailing twelve months is about -65%, which is quite worrisome, although that has fallen from around -99% in late March of this year. It certainly hasn't hindered insiders from buying shares.

Final Notes

I'll leave this update a bit shorter than some prior weekly updates, as the article covering 3rd quarter insider purchases will be published shortly and that will include some interesting insider purchases not discussed here today.

As for the period covered in this article, there were also sizable insider purchases at Prospect Capital Corporation ( PSEC ), solar energy firms Enphase Energy ( ENPH ) & Emeren Group Ltd ( SOL ), ChargePoint Holdings Inc ( CHPT ), and Bill Ackman added to his Howard Hughes Holdings Inc position.

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