Corporate Insiders are Dumping These 11 Tech Stocks

Published on March 22, 2024 at 3:25 pm by Fahad Saleem in Hedge Funds, Insider Trading, News

In this article, we will take a detailed look at Corporate Insiders are Dumping These 11 Tech Stocks. For a quick overview of such stocks, read our article Corporate Insiders are Dumping These 5 Tech Stocks.

The US stock market is on track to conclude a solid week on Friday, as the Federal Reserve’s latest statement saying it’s still targeting three rate cuts this year soothed investors’ nerves. However, many analysts have been repeatedly saying that the overall performance of the stock market would be lukewarm this year as they think the AI-fueled rally has already gone too far and the market needs a breather. UBS recently said in a note that investors should not be “surprised” by a pullback in the short term because of high valuations. However, UBS sees any decline in stocks as a buying opportunity.

Last month, when most of the Magnificent Seven group of stocks slipped, market experts pointed to huge crowding around mega-cap tech stocks and high expectations of investors as the reasons behind the pullback. A report by the Wall Street Journal quoted George Maris, global equities chief investment officer at Principal Asset Management, who said that because there are “so many people that have crowded” into mega-cap tech stocks, expectations of the market have gone through the roof. The analyst said investors hit the exit button on “anything” that they perceive is not “bulletproof.”

BlackRock also said in one of its March updates that while it’s highly bullish on US stocks, stretched valuations means investors would have to be “choosy” while picking stocks. BlackRock also said that it’s time to look beyond the “first layer” of AI tech stack — the obvious names like chips, data centers and infrastructure — and focus on companies that would benefit from the AI revolution in various other sectors. These include companies that mine, process and store data, according to BlackRock.

Photo by AlphaTradeZone

In this backdrop, it’s important to see which tech stocks are being dumped by corporate insiders. For this article we first used Insider Monkey’s stock screener to identify all tech stocks that saw insider selling activity over the past few weeks and picked 11 companies with the highest insider selling activity from insiders (executives, officers, directors) in terms of dollar value. Some top names in the list include Booking Holdings Inc (NASDAQ:BKNG), Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corp (NASDAQ:NVDA). But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).

11. Squarespace Inc (NYSE:SQSP)

Number of Hedge Fund Investors: 24

Website building platform company Squarespace Inc (NYSE:SQSP) ranks 11th in our list of the tech stocks with recent insider selling. Squarespace Inc’S (NYSE:SQSP) CEO Anthony Casalena on March 6 sold 131,480 shares of Squarespace Inc (NYSE:SQSP) at $31.80 per share. Since then the stock has gained about 11.76%.

As of the end of the fourth quarter of 2023, 24 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Squarespace Inc (NYSE:SQSP). The most notable stake in Squarespace Inc (NYSE:SQSP) is owned by Ken Griffin’s Citadel Investment Group which owns a $73 million stake in Squarespace Inc (NYSE:SQSP).

10. Palantir Technologies Inc (NYSE:PLTR)

Number of Hedge Fund Investors: 44

Palantir Technologies Inc (NYSE:PLTR) has been skyrocketing this year as the company keeps getting strong commercial orders and Palantir Technologies Inc (NYSE:PLTR) short sellers continue to get hit. However, Palantir Technologies Inc’s (NYSE:PLTR) cofounder Peter Thiel on March 12 sold about seven million shares of Palantir Technologies Inc (NYSE:PLTR) at $24.79 per share. The stock is down by just 0.8% since then.

Carillon Scout Mid Cap Fund made the following comment about Palantir Technologies Inc. (NYSE:PLTR) in its Q3 2023 investor letter:

“Palantir Technologies Inc. (NYSE:PLTR)’s stock moved higher on hopes that it could win business from the U.K.’s National Health Services and as customer counts grew rapidly in the latest quarterly report for the company’s new Artificial Intelligence Platform (AIP). Palantir also won a significant new contract with the U.S. Army in September, which should last through 2026. The debate on the street is how fast Palantir can monetize its new commercial customers. After the quarter closed, the company announced an enhanced marketing deal with a major auditing and consulting firm.”

9. Elastic NV (NYSE:ESTC)

Number of Hedge Fund Investors: 45

Search-powered solutions software company Elastic NV (NYSE:ESTC) ranks ninth in our list of the tech stocks with recent insider selling activity. Elastic NV’S (NYSE:ESTC) CTO Shay Banon on March 18 sold 280,000 shares of Elastic NV (NYSE:ESTC) at $101.41 per share.

As of the end of the fourth quarter of 2023,45 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Elastic NV (NYSE:ESTC). The biggest stakeholder of Elastic NV (NYSE:ESTC) during this period was Alex Sacerdote’s Whale Rock Capital Management which owns a $273 million stake in Elastic NV (NYSE:ESTC). Since then the stock has slipped by just about 0.6%.

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Elastic N.V. (NYSE:ESTC) in its Q3 2023 investor letter:

“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Turning to positives, Elastic N.V. (NYSE:ESTC) is a data analytics company, engaged in open-source search and analytics engine services. Its shares jumped 27% on strong fiscal first quarter results with beats across billings, revenues, and earnings. Management noted they are benefiting from the trend of vendor consolidation.”

8. Coupang Inc (NYSE:CPNG)

Number of Hedge Fund Investors: 53

Ecommerce company Coupang Inc (NYSE:CPNG) saw insider selling activity this month when one of its board directors, Neil Mehta, sold 1.6 million shares of Coupang Inc (NYSE:CPNG) at $18.68 apiece. The insider selling transaction took place on March 14. Since then the stock has lost about 0.5% in value. In addition to Coupage, insiders are also selling Booking Holdings Inc (NASDAQ:BKNG), Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corp (NASDAQ:NVDA).

Baron Fifth Avenue Growth Fund stated the following regarding Coupang, Inc. (NYSE:CPNG) in its fourth quarter 2023 investor letter:

“We also took advantage of stock price volatility and slightly added to several existing positions: The Korean e-commerce platform, Coupang, Inc. (NYSE:CPNG), whose stock corrected during the quarter following a miss on EBITDA margins, which we don’t view as structural. The company continues to gain market share while holding significant competitive advantages thanks to its robust delivery network.”

7. Dell Technologies Inc (NYSE:DELL)

Number of Hedge Fund Investors: 56

Dell Technologies Inc (NYSE:DELL) saw heavy insider selling activity this month. Dell Technologies Inc (NYSE:DELL) CEO Michael Dell dumped 2,977,478 shares of Dell Technologies Inc (NYSE:DELL) on March 19 at $108.52 per share. The stock has jumped about 6% since then.

Last month Dell stock soared after Dell Technologies Inc (NYSE:DELL) posted strong Q4 results that were aided by upbeat demand for Dell Technologies Inc’s (NYSE:DELL) AI servers. During its Q4 earning call Dell’s management talked about AI-related opportunities and their impact on business:

“We have just started to touch the AI opportunities ahead of us, including broader adoption of AI by enterprise customers and the projected growth in unstructured data where we are well-positioned with industry-leading storage solutions. We believe the long-term AI action is on-prem where customers can keep their data and intellectual property safe and secure. PCs will become even more essential as most day-to-day work with AI will be done on the PC. We remain excited about the long-term opportunity in our CSG business. Look for us to make a number of new product and solution announcements at Dell Technology World in May that will help customers get started with AI and make it easy. Turning to Q4, we saw positive signs in the business as we exited the year, but enterprise and large customers remained cautious with their spend.

Our Q4 execution was solid given the environment with ISG faring better than CSG. We delivered revenue of $22.3 billion with strong profitability and cash flow. Operating income was $2.1 billion. Diluted EPS was $2.20, and cash flow from operations was $1.5 billion. In ISG, traditional server demand grew year-over-year and a third consecutive quarter of sequential growth, and storage demand grew above normal seasonality, though down year-over-year as expected. Storage recovery typically lags servers by a couple of quarters. Our strong momentum in the AI build-out continues as we believe Dell is uniquely positioned with our broad portfolio to help customers build Gen-AI solutions that meet their performance, cost, and security requirements. In Q4, we saw strength across a wider range of customers and geographies within expanding pipeline.

AI-optimized server orders increased by nearly 40% sequentially. We shipped $800 million of AI-optimized servers, and our backlog nearly doubled sequentially, exiting the fiscal year at $2.9 billion. Demand continues to outpace GPU supply, though we are seeing H100 lead times improving. We are also seeing strong interest in orders for AI-optimized servers equipped with the next generation of AI GPUs, including the H200 and the MI300X. Most customers are still in the early stages of their AI journey, and they are very interested in what we are doing at Dell.”

Read the full earnings call transcript here.

6. Mongodb Inc (NASDAQ:MDB)

Number of Hedge Fund Investors: 62

Dwight Merriman, one of the founders of database company Mongodb Inc (NASDAQ:MDB) and now a director at Mongodb Inc’s (NASDAQ:MDB) board, on March 1 dumped 8,000 shares of Mongodb Inc (NASDAQ:MDB) at $433.31 per share. Since then through March 21 the stock has lost about 18%.

As of the end of the fourth quarter of 2023, 62 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Mongodb Inc (NASDAQ:MDB). The biggest stake in Mongodb Inc (NASDAQ:MDB) is owned by Paul Marshall and Ian Wace’s Marshall Wace LLP which owns a $281 million stake in Mongodb Inc (NASDAQ:MDB). In addition to MDB, hedge funds are piling into Booking Holdings Inc (NASDAQ:BKNG), Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corp (NASDAQ:NVDA).

Click to continue reading and see Corporate Insiders are Dumping These 5 Tech Stocks.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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