Inseego Corp., together with its subsidiaries, provides software-as-a-service (SaaS), Internet of Things (IoT), and mobile solutions worldwide. Inseego is one of United States’s small-cap stocks that saw some insider buying over the past three months, with insiders investing in 471.15k shares during this period. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. A research published in The MIT Press (1998) concluded that stocks following insider buying outperformed the market by 4.5%. However, it may not be sufficient to base your investment decision merely on these signals. I will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.View out our latest analysis for Inseego
Who Are The Insiders?
There were more Inseego insiders that have bought shares than those that have sold. In total, individual insiders own over 2.72 million shares in the business, which makes up around 4.57% of total shares outstanding. The entity that bought on the open market in the last three months was Maguire Asset Management LLC Timothy Maguire Foundation Endowment Arm. Although this is an institutional investor, rather than a company executive or board member, the insights gained from direct access to management as a large investor would make it more well-informed than the average retail investor. In this specific instance, I would classify this investor as a company insider.
Does Buying Activity Reflect Future Growth?
From the outside, there are dark clouds on the horizon for Inseego. Delving deeper into the line items, analysts anticipate negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. Though, next year’s expected earnings will deliver a sizeable growth which may indicate the company’s cost controls will show meaningful results, offsetting the fall in revenue growth. Insider buying activities show that they have confidence in its ability to continue growing. They could believe the company is in the midst of a successful turnaround or simply deem the stock is well-below its intrinsic value, with negative sentiment over-discounting the share price.
Did Stock Price Volatility Instigate Buying?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Inseego’s shares ranged between $2.25 and $1.72 over the past three months. This suggests reasonable volatility with a change of 30.81%. Perhaps not a significant enough movement to warrant transactions, thus motivation may be a result of their belief in the company in the future or simply personal portfolio rebalancing.
Inseego’s insider meaningful buying activity tells us the shares are currently in favour, reinforced by the substantial earnings growth expectations, as well as the relatively large share price volatility over the same period of trade. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. there are two relevant factors you should look at:
- Financial Health: Does Inseego have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Inseego? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!