2024 has been marked by record insider sales of “Magnificent Seven” member stocks by their respective CEOs, higher executives, and other notable shareholders, who decided to offload a significant amount of their holdings.
One is Nvidia’s (NASDAQ: NVDA) CEO, Jensen Huang, who announced implementing a Rule 10b5-1 trading plan on March 14. This plan allows for the sale of up to 600,000 shares of Nvidia stock through March 31, 2025.
His most recent sale of over 236,000 Nvidia shares at an average price of $127 totaled a profit of over $30.7 million, bringing his insider trading profits to $250 million in the previous 30 days alone.
Other NVDA insiders are taking profits as well
Contrary to the optimism among retail investors, Nvidia insiders, including key executives and board members, have been aggressively selling their shares.
Notable among them are Board member Mark Stevens and CFO Colette Kress. Stevens sold around 470,000 shares last month at an average price of $124, yielding $58.3 million.
Kress was less active, selling 300,000 shares for $36 million.
Over the last month, 12 insider sales of NVDA stock from only four insiders, amounting to 2,694,500 shares, have occurred, with no insider purchases during this period.
Nvidia might start buying back its shares
Given Nvidia’s strong position in the booming artificial intelligence (AI) sector, Melius Research anticipates the company will generate $270 billion in cash over the next three years, potentially leading to significant shareholder returns.
While management may be hesitant to highlight the possibility of stock buybacks, typically associated with more mature companies, Melius Research’s Ben Reitzes views it as inevitable.
He points out that the best option is to return cash to shareholders, given the limited opportunities for large acquisitions or extensive Research and Development (R&D) investments.
Indeed, Nvidia has already been returning capital to shareholders, announcing a $25 billion repurchase program in August and increasing its quarterly cash dividend by 150% last month, from $0.04 per share to $0.10.
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