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A large insider buy was recently disclosed at Zillow Group (NASDAQ: Z) (NASDAQ: ZG). In late May 2019, board member Jay Hoag purchased over two million shares worth $87.7 million on the open market.
This significantly increased Hoag's ownership stake and shows his conviction not only in the company but also in the current price of the stock. What's more, Hoag is not unique in his position among insiders: Several Zillow execs and board members own substantial amounts of stock. What do they see that makes them so bullish?
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Insider buying and ownership at Zillow
When Hoag purchased stock last month, it was notable not only because of the quantity but also because he picked up the shares on the open market. In doing so, he was very publicly calling attention to his belief that the stock is a buy at the average $41.80 per share he paid. He was also signaling his bullish outlook based on the size of the purchase, which lifted his ownership from roughly 4.3 million shares to 6.4 million shares.
As the table below shows, a handful of other Zillow insiders own stakes worth more than $100 million.
| Zillow Insider | Shares Owned | Value of Stake |
|---|---|---|
| Richard Barton, co-founder and CEO | 16.8 million | $782 million |
| Lloyd Frink, co-founder and chairman | 10.8 million | $504 million |
| Jay Hoag, director | 6.4 million | $299 million |
| Spencer Rascoff, co-founder | 3.0 million | $139 million |
Data Source: Zillow Financial Reports. Value of ownership based on latest Zillow closing price as of this writing: $46.65 per share.
That's a positive sign. It shows that the people running the company have more than just their reputations on the line -- they have significant skin in the game. It's also great that the co-founders are still involved. "Owner-operators" know their businesses better than any outsider possibly could, having built them from the ground up.
What insiders are betting on
The fact that these insiders have made huge bets on Zillow shows their confidence in the company's future, but what is it exactly that they're betting on? The answer: continued growth and a potentially game-changing new business line.
Zillow is in the business of applying technology to all aspects of the residential real estate market. It owns a portfolio of websites focused on different aspects of renting, buying, selling, and financing homes. Through its different offerings, the company helps people research homes to buy or rent, connects people with real estate agents and lenders, and has recently entered into the business of directly buying and selling homes.