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A Costco Insider Just Bought $400,000 Worth of COST Stock. Here’s Why.

Investor Place · 06/10/2022 11:14

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Shares of Costco (NASDAQ:COST) are in the spotlight following an insider purchase from Director Maggie Wilderotter. Wilderotter also serves as the CEO of Grand Reserve Inn and was the former CEO of Frontier Communications (NASDAQ:FYBR).

The all-in-one retailer delivered its quarterly earnings last month, and investors were surprised to hear that membership fees would remain constant. Costco usually raises its membership fees once every five years, with the last raise occurring in 2017. Fees for the gold star membership are currently $60, while the executive membership fee is at $120.

Costco CFO Richard Galanti explained:

“Given the current macro environment, the historically high inflation, and the burden it’s having on our members and all consumers in general, we think increasing our membership fee today ahead of our typical timing is not the right time.”

The price of Costco’s famous hot dog and soda combination remains at $1.50 as well. Its price has remained constant since the mid ’80s.

With that in mind, let’s jump into the details of the insider purchase.

Maggie Wilderotter Buys COST Stock

On June 7, Wilderotter purchased 850 shares of COST stock at an average price of $470.73 per share. After the purchase, she now owns a total of 11,295 shares that are worth more than $5 million at current prices. In addition, Wilderotter is the first Costco insider to purchase shares this year. The purchase was not enacted via a prearranged 10b5-1 trading plan.

The June 7 transaction was the director’s first purchase since Dec. 21. On that day, she purchased 925 shares at an average price of $540.12 per share.

So, how do other insiders feel about their company? In the past year, insiders have purchased 126,847 shares will selling 111,438 shares. In total, insiders have accounted for a net activity of 15,409 shares purchased.

Who Else Is Betting Big on Costco?

Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During Q1, 2,732 funds reported owning COST, an increase of five funds from the prior quarter. Meanwhile, the put/call ratio remains elevated at 1.36, up from 1.11 during Q4. This signifies that more funds own put options against the company than call options. With that in mind, let’s take a look at the five largest shareholders:

  1. Vanguard Group: 38.02 million shares. Vanguard purchased 467,631 shares during Q1.
  2. BlackRock (NYSE:BLK): 31.34 million shares. BlackRock purchased 261,972 shares during Q1.
  3. State Street: 19.03 million shares. State Street purchased 738,447 shares during Q1.
  4. FMR: 10.37 million shares. FMR sold 286,382 shares during Q1.
  5. Bank of America (NYSE:BAC): 7.75 million shares. Bank of America purchased 163,230 shares during Q1.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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