In this article, we will take a look at the 10 technology stocks with insider buying. To see more such companies, go directly to 5 Technology Stocks with Insider Buying.
It seems there’s no end in sight to the bull run in the technology sector that has been responsible for the wider market rally seen in 2023. It has become cliché to quote the oft-repeated fact that most of the gains the US stock market came from just a handful of major tech companies. And latest data shows that the rally in tech stocks might not end. In fact, investors are willing to pay a premium for tech stocks. A Bloomberg report quoted a survey Markets Live Pulse, in which 77% respondents said that they were planning to either increase their investments in technology stocks or keep them steady over the next six months. Just 10% of the survey respondents expect a bubble in the technology sector bursting anytime soon.
However, interestingly, in the same survey, respondents didn’t show that much enthusiasm for AI and AI-related tools. Much of the tech rally in 2023 has come thanks to AI-related hype and news cycle, where every major tech company is jumping in the arena with its own AI tools and software. But in the survey, respondents did not show any strong willingness to spend on AI tools from their own pocket. The Bloomberg report also quoted estimates from Goldman Sachs which say that while seven out of ten jobs would be impacted due to AI, mass-level redundancies are not expected anytime soon. In the survey, over 50% of respondents said that they’d be willing to use AI tools only if they are free or if their employer pays for them.
Epicenter of Risk?
Several analysts are still warning against too much optimism, especially around tech stocks, as they believe valuations have entered dangerous territory and the real effects of the Federal Reserve’s rate hikes are yet to be seen. For example, Dan Suzuki, deputy chief investment officer at Richard Bernstein advisors, in an interview with CNBC, said that he believes tech stocks could be the epicenter of the risks that are growing after stricter lending standards by banks and changing economic dynamics. He said that there are better places to be to take such risks. The analyst said that while profits show that they might be bottoming, there are still risks involved when it comes to valuations. He thinks that the market rally is fragile. The analyst advises against putting all your money in the concentrated group of large-cap stocks which have rallied this year. He thinks one of the risks is higher earnings expectations, which, if not met, could lead to more risks and declines.
Answering a question about his thoughts on China in the context of his earlier bullish take on the country, Suzuki said that China’s growth has been slower than expected but in the current environment of global earnings recession, earnings in China are nonetheless growing.
Despite these bearish and cautious takes one thing is for sure: the probability of recession hitting the US economy has clearly declined. We might not see recession this year, and some believe the worst case scenario would be just a soft landing, that too in 2024. Many notable analyst firms and institutions are having second thoughts on their recession calls. For example, JPMorgan Chase & Co. recently took a step back on its recommendation to go long five-year Treasuries. On the other hand, BlackRock Investment Institute, “who suggested a push into investment-grade bonds at the start of the year, now have a neutral view of the sector,” according to Bloomberg. Bank of America has also pushed its recession expectations down the road amid strong growth and economic resiliency.
Lack of Bad News
While everyone was calling for doom and gloom earlier this year, there were some who were presenting a contrarian opinion and predicting that markets might not dip as expected. Of these analysts, Bespoke co-founder Paul Hickey stands out. Hickey thinks that as everyone was expecting the markets to drop to new lows, all the market needed to defy such expectations was the lack of bad news. And that’s exactly what happened. There were no extremely bad news per se, except consistent rate hikes, which were already expected (or priced in?)
“With consensus being so bearish to kick off the year, rather than needing a positive catalyst to spark a rally, all the market needed was a lack of bad news. Whenever we are faced with conflicting messages from the news and the markets, we always defer to the markets,” Hickey reportedly said.
In this backdrop, it’s important to take a look at what insiders are up to in the technology sector. Many tech companies are working on extremely ambitious projects related to AI and analysts expect these companies to launch these AI-related marvels in the months and years to come. That’s why whenever there’s a large insider buying activity in in the industry, analysts pay attention.
Luis Louro / shutterstock.com
In this article, we used Insider Monkey’s insider trading stock screener and picked 10 technology stocks with heavy insider buying activity over the past three months through August 9. We picked only the tech companies with market cap at least $1 billion, and insider buying transactions carried out by directors, executives or officers.
Technology Stocks with Insider Buying
10. AppFolio, Inc. (NASDAQ:APPF)
Number of Hedge Fund Holders: 19
AppFolio, Inc. (NASDAQ:APPF) is an SaaS company that makes solutions for the real estate industry. Alexander Wolf, a director at the company, bought 26,000 shares of the company in June at $155.18 per share. AppFolio, Inc. (NASDAQ:APPF) has gained about 12.88% since the transaction since it was trading at $172.22 on August 9 morning.
As of the end of the first quarter of 2023, 19 hedge funds in Insider Monkey’s database of 943 hedge funds reported owning stakes in AppFolio, Inc. (NASDAQ:APPF). The most significant stakeholder of AppFolio, Inc. (NASDAQ:APPF) during this period was Echo Street Capital Management of Greg Poole with a $208 million stake in the company.
Polen U.S. Small Company Growth Strategy made the following comment about AppFolio, Inc. (NASDAQ:APPF) in its second quarter 2023 investor letter:
“The top contributors to the Portfolio’s relative performance in the second quarter included AppFolio, Inc. (NASDAQ:APPF), Goosehead Insurance, and Progyny. These were also the top contributors on an absolute basis. AppFolio is a provider of cloud-based software for the property management industry. The company recently underwent a CEO transition, and in the short tenure of the new CEO, it has become clear that he is steering the company to become more profitable in the near term. Additionally, the company’s nascent efforts to move up the market to serve larger property managers—an essential long-term growth driver that materially expands the addressable market—have been encouraging.”
9. ACI Worldwide, Inc. (NASDAQ:ACIW)
Number of Hedge Fund Holders: 22
Payment solutions software company ACI Worldwide, Inc. (NASDAQ:ACIW) ranks 9th in our list of the technology stocks with insider buying. Thomas Warsop, a board member and now the CEO of ACI Worldwide, Inc. (NASDAQ:ACIW), recently bought 43,000 shares of the company at $23.63 per share.
As of the end of the first quarter of 2023, 22 hedge funds in Insider Monkey’s database of 943 hedge funds reported having stakes in ACI Worldwide, Inc. (NASDAQ:ACIW). The most significant shareholder of ACI Worldwide, Inc. (NASDAQ:ACIW) during this period was Amy Minella’s Cardinal Capital which had a $35 million stake in the company.
Earlier in August ACI Worldwide, Inc. (NASDAQ:ACIW) posted strong Q2 results. GAAP EPS in the period came in at -$0.06, beating estimates by $0.08. Revenue in the quarter fell 5% year over year to $323.33 million, beating estimates by $17.36 million. Total adjusted EBITDA in the period came in at $57 million, compared to $66 million in the same quarter last year.
8. Zebra Technologies Corporation (NASDAQ:ZBRA)
Number of Hedge Fund Holders: 26
Earlier in August, Anders Gustafsson, who is the co-chair at Zebra Technologies Corporation (NASDAQ:ZBRA), amassed 4,100 shares of the company at $246.39 per share. Since the transaction Zebra Technologies Corporation (NASDAQ:ZBRA) has gained about 2.9% as of August 9.
As of the end of the first quarter of 2023, 26 hedge funds out of the 943 funds in Insider Monkey’s database reported owning stakes in Zebra Technologies Corporation (NASDAQ:ZBRA). The most significant stakeholder of Zebra Technologies Corporation (NASDAQ:ZBRA) during this period was John W. Rogers’s Ariel Investments which owns a $151 million stake in the company.
Zebra Technologies Corporation (NASDAQ:ZBRA) recently fell after the company cut its FY net sales outlook and also gave a weak Q3 guidance.
Ariel Investment made the following comment about Zebra Technologies Corporation (NASDAQ:ZBRA) in its Q3 2022 investor letter:
“We also bought shares of two companies held in other Ariel portfolios, leading global manufacturer of power generation equipment Generac Holdings, Inc. (GNRC) and bar-code manufacturer Zebra Technologies Corporation (NASDAQ:ZBRA).
Meanwhile, ZBRA’s brand strength, distribution network and commitment to innovation enable it to take share, earn industry-leading profitability and penetrate new markets. A recent pullback in stock price provided an attractive entry point. Shares have come under pressure due to investor concerns around inflation and supply chain disruptions. At current valuation levels, we think investors are underappreciating ZBRA’s alignment with the global effort to improve supply chain efficiency. At the same time, the company is leveraging the wide moat in its core business to expand into faster growing markets including warehouse robotics and machine vision. Meanwhile ZBRA continues to deliver prodigious free cash flow which we believe will continue to be deployed towards both growth and share repurchases.”
7. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 27
Photoelectronic components and semiconductors company Coherent Corp. (NYSE:COHR) ranks 7th in our list of the tech stocks with insider buying activity so far in 2023. David L Motley, a director at the company, bought 6,041 shares of the company in June 2023 at $49.62 per share.
As of the end of the first quarter of 2023, 27 hedge funds out of the 943 funds tracked by Insider Monkey reported owning stakes in Coherent Corp. (NYSE:COHR).
Giverny Capital made the following comment about Coherent Corp. (NYSE:COHR) in its Q1 2023 investor letter:
“I made small additions to our holdings in Eurofins Scientific and Coherent Corp. (NYSE:COHR) during the quarter. Both stocks were down a lot in 2022 and I feel both have excellent long-term prospects. We’ve generated a good absolute return over three years, though below my expectations relative to the S&P 500. We own an eclectic collection of high-quality companies, with a low level of debt across the portfolio and a high level of exposure to founder- or family-managed businesses.”
6. Asana, Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 29
Project management software platform company Asana, Inc. (NYSE:ASAN) has been seeing huge insider buying activity from its cofounder and CEO Dustin A. Moskovitz who’s been busy amassing the company shares since June 2023. In June he bought about $5.6 million worth of company shares at $23.16 per share. Asana, Inc. (NYSE:ASAN) has declined about 6.9% since the transaction.
In June, Berenberg analyst Andrew DeGasperi started covering Atlassian (NASDAQ:TEAM), a rival of Asana, Inc. (NYSE:ASAN), with a Hold rating. Importantly, the analyst favored Asana, Inc. (NYSE:ASAN) and Monday.com and said these two stocks have a better risk-reward profile.
Diamond Hill Capital made the following comment about Asana, Inc. (NYSE:ASAN) in its Q3 2022 investor letter:
“Work management software company Asana, Inc. (NYSE:ASAN) has, in our view, a relatively undifferentiated and discretionary software product within a software category that will likely be meaningfully smaller than anticipated. Additionally, Asana’s operating losses continue to widen as its revenues have begun decelerating.”
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Disclosure: None. 10 Technology Stocks with Insider Buying is originally published on Insider Monkey.