We recently compiled a list of the 10 Technology Stocks with Insider Buying in 2024. In this article, we are going to take a look at where BILL Holdings, Inc. (NYSE:BILL) stands against the other technology stocks.
Tracking insider buying activity can provide valuable insights into potential investment opportunities. Corporate insiders, such as named executive officers, directors, and other key personnel, possess a deeper understanding of their companies than the average investor. Their knowledge extends beyond quarterly earnings reports and public filings, allowing them to assess long-term growth prospects, operational trends, and industry shifts well before these factors are reflected in stock prices. When insiders buy shares of their own company, it often signals confidence in the firm’s future. Unlike institutional investors or analysts who often react to short-term market fluctuations, insiders usually have a vested interest in sustained growth, making their purchases a compelling indicator of potential upside. Furthermore, while analysts and investors valuing a business often rely on a set of assumptions, many of which are imprecise, insiders leverage confidential information extracted from their relationships and correspondence with clients and suppliers to get precise outlooks on the evolution of demand and other industry trends.
Empirical studies on the subject tend to agree that insider buying can be a reliable predictor of subsequent stock price returns, but there are some caveats. Research has shown that stocks with significant insider purchases tend to outperform the broader market in the subsequent periods, as insiders have access to material, non-public information that allows them to make more informed investment decisions than the public. Studies by academics and analysts indicate that insider purchases, particularly by top executives and directors, correlate with future price appreciation, especially when conducted in clusters or during periods of market uncertainty. This suggests that investors should not overreact to individual transactions made by an insider, as those can be motivated by purposes unrelated to the general direction of the business – for example, a newly promoted executive officer could be suddenly buying the company’s stock simply to comply with the company’s internal guidelines on insider ownership. What one should be looking for is clusters of insiders buying significant amounts worth of stock, at specific periods, such as material developments in the business or industry. Insiders are often active buyers of their own company’s stock during times of rapid decline in the stock price due to such factors as overreaction to some negative short-term developments in the business, like for example missing quarterly earnings. Insiders, with their greater visibility into the future, have a better understanding of the magnitude of risk, and can thus exploit opportunities arising from the fears of less informed investors.
Studies also show that peak buying and selling from insiders occurs at extreme points of the market – for instance, record valuations and market capitalizations tend to coincide with accelerated insider selling, while troughs in the market and peak investor fears usually coincide with insiders starting to buy. With the US stock market currently being near peak valuations, insider buying has been largely muted, especially in expensive sectors like technology. Our research suggests that all of the top 50 largest technology companies in the US exhibit negative overall insider transactions, meaning that selling dominates over buying. In this context, finding technology stocks in which insiders actively buy shares could offer unique insights and positive signals for the company’s future. In this view, we will take a look at some of the tech stocks with insider buying.
Our Methodology
We used Insider Monkey’s insider trading stock screener to find technology stocks with at least two insiders buying shares worth at least $100,000 during 2024. We believe that multiple insiders buying significant amounts of stock represents a higher chance that insiders have high confidence in the company. For all the companies we also include the number of hedge funds that own it and include in the article the top 10 names with the largest hedge fund ownership, according to Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A group of finance professionals hard at work in an office, signifying accounts payable and accounts receivable.
BILL Holdings, Inc. (NYSE:BILL)
Number of Hedge Fund Holders: 64
BILL Holdings, Inc. (NYSE:BILL) is a leading financial technology company that provides cloud-based software solutions for small and midsize businesses to automate accounts payable, accounts receivable, and expense management. Its platform streamlines financial operations by integrating with accounting software, enabling faster payments, improved cash flow management, and enhanced financial visibility. Serving a wide range of industries, BILL helps businesses digitize back-office functions, reducing manual processes and increasing efficiency. It is one of the tech stocks with insider buying.
The shares of BILL Holdings, Inc. (NYSE:BILL) went sideways for most of 2024 as the company reported mixed results due to a challenging macroeconomic environment for small and medium-sized businesses. While revenue growth was positive at 22% in FY2024, guidance for FY2025 was slower, in the mid-teens only, and some headwinds from FX and declining stand-alone subscription revenue still persisted. Nevertheless, BILL recovered and delivered strong financial results in the latest quarter, with 16% YoY core revenue growth and significant margin expansion. The platform served more than 480,000 businesses, processing nearly $85 billion in payment volume across 30 million transactions.
BILL Holdings, Inc. (NYSE:BILL) demonstrated progress in strategic initiatives, including expanding card adoption among AP and AR customers which more than tripled over the past 2 years, and advancing its invoice financing product which has served over 30,000 vendors with more than $800 million in advances. Looking ahead, management is focusing on penetrating the market opportunity with differentiated solutions while maintaining profitable growth, as evidenced by their reaffirmed core revenue guidance and enhanced profitability outlook. Over the long term, they also plan to implement several strategic initiatives to drive payment monetization expansion, including launching new products, enhancing payment experiences, working closely with suppliers and accountants, and pursuing an embedded solutions strategy. All in all, the optimistic outlook is further reinforced by significant insider buying in the last months.
Overall BILL ranks 2nd on our list of the technology stocks insiders are buying in 2024. While we acknowledge the potential of BILL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BILL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
