Buying the dip! T-Mobile board member spends $900K on the company's stock
T-Mobile's shares recently hit an all-time high at $248.15 which no doubt led many of the carrier's executives to put on a happy face. But what goes up must come down and the carrier's shares have run into some profit-taking lately. Since peaking, T-Mobile's stock has declined $29.04 with the stock ending the week at $219.11 for an 11.7% decline off the all-time high.
The reduced stock price led one member of T-Mobile's board of directors, Andre Almeida, to shell out $897,527 for the purchase of 3,807 shares of T-Mobile at an average price of $235.717 per share. The transaction took place on December 9th. Such "insider" stock purchases are often seen as a bullish signal since board members typically know much more about how a company's business is really performing than the typical Wall Street analyst or investor. Almeida's own money is at risk which also raises the importance of the purchase.
Just a few days after Almeida's purchase, T-Mobile announced that it would spend up to $14 billion through the end of this year to buy back its own shares. This is done to raise the value of existing stockholders' shares since the practice reduces the number of shares outstanding. We should note that following the buy/sell decisions made by company insiders is not a short-term system for investors. For example, less than one month after buying the 3,807 shares of T-Mobile, Almeida has seen the value of his latest purchase decline by $63,196.
Almeida was once European Head of Consumer and B2B Telco for Deutsche Telekom. He also held various leadership positions at Portugal Telecom.
T-Mobile's stock has risen 35% over the last year and analysts are still bullish on the stock with price targets reaching as high as $280. Not all Wall Street firms are bullish on T-Mobile. KeyBanc Capital Markets downgraded the stock from Overweight to Sector Weight due to fears that the company is overvalued. Meanwhile, Bernstein SocGen Group started its coverage of T-Mobile by rating it a Market Performer. The firm highlighted T-Mobile's amazing journey that took it from last among the nation's big four wireless carriers to its current position at number two. T-Mobile is also the most innovative and fastest-growing carrier in the U.S. and the carrier is currently valued at $254.27 billion.
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