Insider buying, where company founders purchase stock in their own companies, is often seen as a positive signal of confidence in the company's prospects. Several notable founders earlier engaged in significant insider buying, indicating their belief in the future success of their respective companies.
Jim DeFranco, the Executive Vice President of Dish Network (DISH: US) and a co-founder of the satellite TV provider made substantial insider purchases between March 2 and March 8, acquiring nearly $16 million worth of DISH stock. Founders such as DeFranco, who are still actively involved in their companies possess valuable insights into the company's operations, making their insider buying noteworthy.
While founder insider buying can be a positive signal, it is important to consider the overall market conditions. In 2022, many stocks in the Global X Founder-Run Companies ETF experienced significant declines, primarily due to the tech industry's downturn. However, over the long term, insider buying by founders has proven to be a strategy that tends to work.
Dustin Moskovitz, the CEO of Asana (ASAN:US) and a co-founder of Meta Platforms (META:US) announced plans to purchase up to 30 million Class A shares of Asana for approximately $700 million. Moskovitz's insider buying, combined with positive financial projections, drove a significant increase in Asana's stock.
Jeff Lawson, the co-founder and CEO of Twilio (TWLO:US) recently acquired nearly $10 million worth of the company's Class A stock. Despite challenges including layoffs, Lawson's insider buying reflected his belief in Twilio's long-term success.
Shopify (SHOP:US) founder and CEO Tobias Lütke made significant stock purchases in late October 2022, demonstrating his confidence in the e-commerce platform's future. Although not recent, Lütke's insider buying yielded positive returns, signaling his belief in the company's growth potential.
Anthony Neto, CEO of SoFi Technologies (SOFI:US), consistently purchased shares in the company since December 2022 indicating his belief in its potential. Neto's stock purchases contributed to a positive trend in SOFI's share price.
SLR Investment (SLRC:US), a Business Development Company (BDC), saw its Chairman and Co-CEO Michael Gross buy shares, demonstrating his confidence in the company's investment strategy. While Gross is currently underwater on his purchases, his commitment reflected his belief in SLRC's long-term prospects.
Randall Kirk, the founder of Precigen (PGEN:US), made significant purchases of the company's shares around the start of 2023. Despite the decline in stock price, Kirk's commitment through these purchases and his substantial ownership stake demonstrated his risk tolerance and belief in Precigen's potential.
While founder insider buying can be an encouraging sign for investors, it is crucial to conduct thorough research and consider various factors before making investment decisions.