Reading into insider buying at Starbucks — plus, what’s driving the market rebound
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market update: Stocks are trying to maintain a rebound after a nasty market sell-off on Thursday that carried over into Friday’s opening. It’s been a volatile few days, but the S & P 500 is still on track to squeeze out a gain for the week. One reason for the early turnaround on Friday, especially in AI stocks, might have been the commentary by Vertiv Chairman Dave Cote on “Squawk on the Street.” The sensible Cote, who also led Honeywell from 2002 to 2017, explained he wasn’t too worried about debt-fueled spending on data center projects by the hyperscalers because of their ability to generate cash flow. He also has a positive outlook for at least the next five years based on orders. We don’t think this scrutiny over valuations and financing concerns is over for the AI stocks just yet, but Cote is bankable and a straight shooter, and if he said the outlook for the next few years is strong, it merits consideration. Insider buying at Starbucks: Tracking insider buying and selling activity can be a good way to gauge sentiment around a stock, but it’s not an exact science. Insider selling can be nuanced and difficult to read into, especially if it’s part of a predetermined plan. Insiders can sell their company’s stock for many reasons — maybe they are about to buy a new house or pay for a wedding. However, if an insider buys his company’s stock, it is for one reason only: to make a profit. That’s why we listen when an executive or board member steps up and makes a purchase. A filing late Thursday showed that Starbucks board member Jørgen Vig Knudstorp bought 11,700 shares at an average price of $85 on Nov. 10. This represents a nearly $1 million investment, which is around the threshold we consider notable. Knudstorp has been a Starbucks director since March 2017, so he’s seen both the highs and the lows at the company. We view this as a vote of confidence in the coffee giant’s future. Next week: It will be an important stretch of the third-quarter earnings season. The company at the heart of the AI investment cycle, Nvidia , reports Wednesday after the closing bell, as does cybersecurity stock Palo Alto Networks . We’ll also hear from several major retailers like Home Depot , Target , Lowe’s , TJX Companies , and Walmart . For economic data, we’re waiting to see what will be released now that the government shutdown is over. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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