Finance

What Recent Ownership Trends Suggest About Chegg, Inc. (CHGG)’s Future Performance

Recent insider trends for Chegg, Inc. (NYSE:CHGG) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on CHGG is anything to go by, investors should pay attention.

Institutions own 104.90% of Chegg, Inc. (CHGG)’s shares. The total value of these holdings, in millions, is $1,861. Among active positions in the latest quarter, 107 holders increased their positions by a total of 20.78 million shares, 63 holders decreased the positions by a total of 6.26 million shares, and 13 holders held their positions. This works out to a net increase in ownership of 14.52 million shares, and suggests that institutions are feeling bullish about the stock.

Among new and sold out positions, 27 holders initiated new positions by a total of 5.94 million shares and 28 holders exited their positions by a total of 1.78 million shares. This nets out to an increase of 4.16 million shares and is a bullish sign for CHGG.

In the last three months, insiders executed a total of 19 trades. 19 were sells. Insider ownership decreased by a total of 655115 shares, which suggests that CHGG’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a different story: insiders executed 22 buys and 70 sells, and ownership increased by a net of 185957 shares.



The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Chegg, Inc. (NYSE:CHGG)’s short interest is 24.51 million shares, or 32.79% of the float. This represents a decrease of -2% in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.

Ownership trends and trading patterns can be useful tools for predicting a stock’s performance, but it’s also important to consider the technicals in order to form a more comprehensive view. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that CHGG is a Strong buy, which implies that CHGG is expected to outperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Chegg, Inc. (NYSE:CHGG) is undervalued.

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