Monster insider trading warning for Nvidia (NVDA) stock

Monster insider trading warning for Nvidia (NVDA) stock

The year 2024 was marked by record insider sales of shares of the members of the “Magnificent Seven” by their respective CEOs, executives and other notable shareholders who decided to sell off a significant portion of their shares.

One of them is Jensen Huang, CEO of Nvidia (NASDAQ: NVDA), who announced on March 14 the implementation of a trading plan under Rule 10b5-1. This plan allows the sale of up to 600,000 Nvidia shares until March 31, 2025.

His recent sale of over 236,000 Nvidia shares at an average price of $127 netted him a profit of over $30.7 million, bringing his insider trading profit in the last 30 days alone to $250 million.

Huang's sale of NVDA shares. Source: SEC
Huang’s sale of NVDA shares. Source: SEC

Other NVDA insiders also make profits

Contrary to retail investor optimism, Nvidia insiders, including key executives and board members, have been aggressively selling their shares.

Particularly noteworthy 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, generating proceeds of $58.3 million.

Kress was less active, selling 300,000 shares for $36 million.

In the last month, there were 12 insider sales of NVDA shares by just four insiders totaling 2,694,500 shares, with no insider purchases during this period.

Nvidia could start buying back its own shares

Given Nvidia’s strong position in the booming artificial intelligence (AI) sector, Melius Research expects the company to generate $270 billion in cash over the next three years, potentially leading to significant returns for shareholders.

While management may be hesitant to highlight the possibility of share buybacks, which are usually associated with more mature companies, The Ben Reitzes thinks it is inevitable.

He points out that given the limited opportunities for large acquisitions or heavy investments in research and development (R&D), the best option is to return cash to shareholders.

Nvidia has already returned capital to shareholders, announcing a $25 billion share buyback program in August and increasing its quarterly cash dividend by 150% from $0.04 to $0.10 per share last month.

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