Lumen Technologies’ (NYSE: LUMN) The shares gained ground in Monday trading after revelations of insider buying. The telecom specialist’s stock price was up 8% as of 1:15 PM ET, according to data from S&P Global Market Intelligence.
Lumen recently filed documents with the Securities and Exchange Commission (SEC) showing that CEO Kate Johnson and CFO Christopher Stansbury had made significant purchases of company stock. The documents showed that Johnson bought shares starting on November 2 and that Stansbury bought shares on November 3.
Two top executives look optimistic about Lumen shares
Legendary investor Peter Lynch once said, “Insiders may sell their stocks for all kinds of reasons, but they buy them for only one reason: they think the price will rise.” That may be a bit of a simplification, but insider buying is generally a bullish sign – and Lumen is profiting on the news that two of its key managers are buying company stock.
According to the documents, CEO Kate Johnson started buying shares last Thursday. Johnson purchased exactly 1 million shares of Lumen at an average price of $0.97 per share. Meanwhile, Stansbury bought company stock last Friday – buying 500,000 shares at an average price of about $1.10 per share.
What comes next for Lumen stock?
Lumen has struggled in 2023 and its stock price is currently down about 77% in year-to-date trading, even with today’s gains. The company released a third-quarter report that showed earnings significantly below expectations, and the company combined the release with the announcement of a debt restructuring deal that added new layers to the telecom sector’s already complicated financial structure.
The news that Johnson and Stansbury have made large purchases of Lumen stock signals a significant vote of confidence from key company insiders. On the other hand, it’s not entirely unheard of for insiders to buy shares when their company is struggling, in order to send reassuring signals to other investors.
Lumen’s stock still seems cheaply valued by some measures, but there are still plenty of question marks when it comes to the company’s ability to pull off a successful turnaround.
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Keith Noonan has no positions in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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