This week, we wanted to expand beyond the notable insider buys and sales from our list below, and instead focus on another company with a rather interesting insider purchase. The purchase of cloud business analytics company Domo Inc. (DOMO) by its Director Daniel Daniel stood out for various reasons. Domo provides data analysis and visualization tools, a large data warehouse that can easily be manipulated and accessed by authorized users, and various machine learning and artificial intelligence programs. As of January 31, 2023 (the end of Domo’s fiscal year 2023), Domo had over 2,500 different organizations as customers.
But it wasn’t the nature of Domo’s business that stood out to us, it was the series of purchases made by insiders over the last two weeks. Prior to these recent purchases, most insiders of Domo were selling shares. The majority of sales came from Joshua James, the founder and CEO of Domo. Joshua James founded Domo in 2010, just a year after selling another business he co-founded (and later took public), Omniture, to Adobe (ADBE) for $1.8 billion. Mr. James eventually stepped down from his role in March 2022, and almost exactly a year later, he came back to lead the company and take over as CEO once again.
Founder-led businesses have always been a favorite of ours, and Mr. James has joined the ranks of the so-called “boomerang” CEOs, where CEOs or founders return to lead the business after a hiatus. Notable examples of this include Howard Schultz returning to lead Starbucks (SBUX) after an 8 year break, or Steve Jobs returning to lead Apple (AAPL).
What was really interesting to see was that despite his years of selling Domo stock (both as CEO and as a 10% owner after his departure), when Mr. James returned to the company this year, he immediately began to buy shares on the open market. According to Section 16(b) of the Securities Exchange Act of 1934, which states that if a sale and a purchase (or vice versa) occur within a six-month period, the insider must give back any profits to the company. We have a screen called the Flip Floppers that identified these types of insider transactions. Despite having to pay back any profits made from these “matching transactions”, the fact that Mr. James still chose to purchase stock was noteworthy.
Typically, a signal like this alone wouldn’t be enough to make a company particularly interesting. Yet Mr. James wasn’t alone in his purchases of Domo, Director John Pestana (the other co-founder of Omniture) also purchased shares in early March 2023, as did Director Daniel Daniel. This was Mr. Daniel’s first purchase (or first transaction in general) of the company – despite being on the board for over four years.