Investors can learn a lot by paying attention to the behavior of corporate insiders as they handle positions in their own companies. Insiders may sell shares for many reasons (such as buying a house, paying for college, or getting ready for retirement). They generally only buy for one reason: they believe they will make more money.
The chief executive officer is often one of the largest and best-informed shareholders in any company. Let’s see whether Broadcom Inc. (NASDAQ: AVGO) CEO Tan Hock has been increasing or decreasing his shares over the past year and whether he knows something we don’t.
What You Need to Know About Broadcom
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Broadcom designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide.
The company operates in two segments, Semiconductor Solutions and Infrastructure Software and provides the following:
- Set-top box system-on-chips (SoCs)
- Cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs
- Wireless local area network access point SoCs
- Ethernet switching and routing custom silicon solutions
- Serializer/deserializer application specific integrated circuits
- Optical and copper, and physical layer devices
- Fiber optic components and RF semiconductor devices
- RF front-end modules and filter
- Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs
- Custom touch controllers
- Inductive charging
- Attached small computer system interface, and redundant array of independent disks controllers and adapters
- Peripheral component interconnect express
- Fiber channel host bus adapters
- Read channel based SoCs
- Custom flash controllers
- Preamplifiers
- Optocouplers, industrial fiber optics, and motion control encoders and subsystems
- Light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers
Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.
Broadcom was founded in 1961 and is headquartered in Palo Alto, California. That part of Silicon Valley is also home to AppLovin Corp. (NASDAQ: APP) and HP Inc. (NYSE: HPQ). Among Broadcom’s many competitors are Qualcomm Inc. (NASDAQ: QCOM) and Texas Instruments Inc. (NASDAQ: TXN). Tan has been chief executive at Broadcom since 2006.
The company posted annual revenue of about $35.8 billion and has a market capitalization near $576 billion. Shares recently hit a multiyear high of $1,284.55. The stock is up more than 10% year to date and almost 105% higher than a year ago. The Nasdaq’s gain in the past year is less than 32%.
How Broadcom’s CEO Is Trading
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One year ago, Tan owned more than 250,600 shares, worth about $111.3 million. Today, he owns around 170,700 shares. Yet, despite parting with nearly 80,000 shares, the value of the stake has jumped by almost 96% to over $218.0 million as the share price has risen.
| Shares a Year Ago | Shares Today | % Change |
| 250,677 | 170,714 | −31.9% |
While the value of the stake nearly doubling no doubt pleases CEO Tan Hock, by selling shares he has left quite a bit of money on the table. Tan may have sold shares for a variety of reasons, and we may never know why. The company’s next earnings report is scheduled for March 7, and speculation is growing that a stock split is coming, as shares are trading for more than $1,200 apiece. Keeping an eye on what Tan and other insiders do after all this could help clarify what they think about the stock’s prospects.
Other shareholders to watch include Broadcom co-founder and board chair Henry Samueli. His stake is worth over $6.4 billion. Yuan Du has a stake worth more than $563.7 million, while that of former Chief Operating Officer Charlie Kawwas is worth almost $90.4 million. Note that, like Tan, Kawwas has sold shares in the past year. (These 19 executives pay themselves over $150 million a year.)
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