Buy this ASX share that all its directors have been snapping up: expert

Many investors will not need reminding that 2022 has been a distressing time to own technology shares.

Most have fallen so much that they will need to become multibaggers in the next market recovery for them to return to the dizzying heights of 2021 and 2020.

The trouble is, how can you tell which ones have a genuine chance of such a resurgence and which stocks are just duds?

One clue could be to see if the people who run the business are buying the shares.

Insiders like directors and executives could be selling their shares for many different reasons — buy a new house, pay for a new car, repay loans, pay the kids’ private school fees. But the theory is that there can only be one reason why they would buy. 

It’s that they think the share price will head up.

After all, why would these presumably smart people, who have access to the inside machinations of the business, risk their own money unless they thought it was headed for a bright future?

What’s doing with Aussie Broadband shares?

One investor asked Shaw and Partners portfolio manager James Gerrish what he thought about buying Aussie Broadband Ltd (ASX: ABB) shares.

The internet provider has helplessly watched its stock price plunge 60% since Easter. Is it in terminal decline or does it have prospects of a recovery?

“It has indeed been a tough period for Aussie Broadband, with a number of earnings downgrades sending the stock down,” Gerrish told a Market Matters Q&A.

But Gerrish has noticed a positive signal from its ASX disclosures.

“Following last month’s result and subsequent share price decline, it is worth highlighting that all of Aussie Broadband’s directors have bought stock in the market since — clearly a very good sign.”

Managing director Phillips Britt, chair Adrian Fitzpatrick, board members Michael Omeros and Richard Dammery have all bought more Aussie Broadband shares over the past few weeks. 

No executives or directors have sold since early March.

Gerrish’s team is bullish after the market update last week.

“On Friday they reconfirmed FY23 guidance and from speaking to management post their FY22 result, the guidance we believe could well be on the conservative side,” he said.

“Our Emerging Companies Portfolio already holds a large 8% exposure to Aussie Broadband hence we are not likely to increase this exposure, but we do still like the stock at current levels and would in all likelihood buy if we had no position.”

The post Buy this ASX share that all its directors have been snapping up: expert appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Which ASX 200 shares could benefit from the federal budget?
• Which ASX All Ords shares could perform well in a recession?
• Aussie Broadband share price is ‘quite cheap for what it is’: expert

Motley Fool contributor Tony Yoo has positions in Aussie Broadband Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/Zac1D7l