Director Stephen Luczo bought $3.7 mil of AT&T(T) at $37.60 on Feb.4. It was Luczo’s — who is also Chairman of the Board at Seagate Technology(STX) — first open market purchase of AT&T shares since becoming a director in November.
Luczo’s history as a corporate insider dates back to August of 2003 when he was CEO of Seagate. And while his open market purchases — as an insider at Seagate and Microsoft(MSFT) — have been infrequent, he has shown a knack for well-timed buys.
| Filing Date | Trade Date | Company | Symbol | Transaction | Shares | Avg. Price | Total | Return |
| 05-Feb-2020 | 04-Feb-2020 | AT&T Inc. | T | Market Purchase | 100,000 | 37.6 | $ 3,760,380 | — |
| 03-May-2016 | 03-May-2016 | Seagate Technology | STX | Market Purchase | 200,000 | 20.08 | $ 4,016,340 | 123.23% |
| 02-Feb-2016 | 02-Feb-2016 | Seagate Technology | STX | Market Purchase | 200,000 | 30.17 | $ 6,034,430 | 51.54% |
| 05-Jun-2012 | 04-Jun-2012 | Microsoft Corporation | MSFT | Market Purchase | 17,500 | 28.72 | $ 502,600 | 312.59% |
| 09-May-2012 | 08-May-2012 | Microsoft Corporation | MSFT | Market Purchase | 16,000 | 30.72 | $ 491,562 | 288.23% |
| 26-Aug-2009 | 25-Aug-2009 | Seagate Technology | STX | Market Purchase | 100,000 | 12.38 | $ 1,238,100 | 342.72% |
| 13-Feb-2009 | 12-Feb-2009 | Seagate Technology | STX | Market Purchase | 500,000 | 4.45 | $ 2,225,750 | 1025.87% |
| 29-Jan-2009 | 27-Jan-2009 | Seagate Technology | STX | Market Purchase | 500,000 | 3.56 | $ 1,779,100 | 1319.64% |
Stephen Luczo has an impressive history of insider buying at Seagate and Microsoft.
Early in 2009, STX stock was rising from an all-time low of $2.98 hit during the depths of the financial crisis. In Jan. and Feb. of that year, Luczo bought one million shares of Seagate at an average price of $4.00. That stake is worth $55.29 mil. today. A gain of 1,174%. Luczo added an additional 100,000 shares in August of that year at $12.39.
Luczo bought $10 mil more Seagate from Feb. to June of 2012 just before STX went on a 275% run over the next 2.5 years.
In May and June of 2012, Luczo, as a director at Microsoft, bought 33,500 MSFT at an average price of $29.68. That $994K investment is worth about $6.1 million today.
AT&T shares are off to a slow start in 2020, after a big 2019.
AT&T stock has underperformed the market to date in 2020, down about 3%. The company’s year-end results, released on Jan. 29, showed small misses on revenue and significant subscriber losses at DirecTV. The company reiterated its 2020 outlook, but investors were less than enthusiastic. Still, AT&T stock had a big 2019, rising 36.9% compared with the 28.9% rise in the S&P 500.
The day after T’s year-end report, UBS analyst John Hodulik cut his rating to neutral from buy, dropping his price target to $39 from $42. The analyst is concerned that AT&T faces both intensifying competition in the wireless business in the year ahead and increased financial pressure on its entertainment business.
A 5.5% dividend yield, plus a sizable buyback plan, could support T shares even if business gets tough.
Hodulik noted that T’s wireless business generates half of AT&T’s profits, “and continues to be the key growth driver of the business.” But he believes that 2020 will see increased wireless competition and expects Apple’s (AAPL) 5G iPhone launch in late 2020 to trigger “intense promotional activity.” Hodulik said he’s “increasingly worried about the profitability of the U.S. wireless sector.”
Even if AT&T’s profitability wanes in 2020, a dividend yield currently at 5.5%, plus a buyback program equal to about a 3% reduction in shares per year, could provide support for the share price.
The fact that Stephen Luczo bought $3.7 mil of AT&T at these levels suggests the stock is likely a good investment.
Contact Mark about investing based on SEC filings and smart money disclosures.
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