High Insider Ownership as a Catalyst for Earnings Growth in U.S. Growth Stocks

The alignment of interests between corporate management and shareholders has long been a focal point for investors seeking to identify high-growth opportunities. Recent academic research and market trends suggest that companies with elevated insider ownership often exhibit stronger earnings growth, driven by reduced agency costs and strategic alignment with long-term value creation. This article examines three U.S. growth stocks-Figure Technology Solutions, Samsara, and Liberty Latin America-through the lens of insider ownership and valuation metrics to uncover undervalued opportunities with robust growth trajectories.

Academic Insights: Insider Ownership and Earnings Performance

Studies have consistently demonstrated a nuanced relationship between insider ownership and corporate performance. For instance, a 2024 paper on Taiwanese hotels found an inverted U-shaped correlation between insider managerial ownership and financial metrics like return on assets (ROA) and Tobin's Q, suggesting that performance improves up to an optimal ownership threshold before declining. Similarly, a 2023 study noted that high insider ownership in firms with elevated price-to-earnings (P/E) ratios can enhance ex post returns by aligning management incentives with shareholder interests. These findings underscore the importance of evaluating insider ownership not in isolation but in conjunction with a company's growth prospects and valuation.

Case Study 1: Figure Technology Solutions (FIGR)

Figure Technology Solutions, a fintech innovator in blockchain-based lending and real-world asset tokenization, exemplifies the synergy between insider alignment and growth. With 27.4% insider ownership, the company is projected to deliver annual earnings growth of 47.3% through 2026 according to financial projections. Despite a trailing P/E ratio of 155.78-well above the US Consumer Finance industry average of 9.3 according to valuation data-its forward P/E of 145x reflects investor confidence in its disruptive business model. . Notably, insiders have engaged in significant share sales in recent months, yet the company's Q3 2025 net income surged to $7.77 million, reversing prior losses according to financial reports. This duality of strong financial performance and high insider ownership positions FIGR as a compelling case for investors willing to tolerate elevated valuations for high-growth potential.

Case Study 2: Samsara (IOT)

Samsara, an industrial IoT platform provider, boasts the highest insider ownership among the three at 36.6%, coupled with a projected 62.6% annual earnings growth rate. The company's Q3 2025 net profit of $7.77 million marked a pivotal transition from losses, while its 2026 revenue guidance of $1.597 billion signals robust scalability. However, its valuation metrics present a mixed picture: a negative trailing P/E ratio (due to historical losses) and a price-to-book (P/B) ratio of 17.3, indicating the market's premium on its intangible assets. While the high P/B suggests potential overvaluation, Samsara's insider ownership and operational turnaround argue for a re-rating as profitability solidifies.

Case Study 3: Liberty Latin America (LILA)

Liberty Latin America, a telecommunications infrastructure provider, offers a contrasting profile with 11.1% insider ownership and a forward P/E of 15.87 according to financial data, significantly lower than its peers. The company's H1 2025 operating loss of $205 million according to financial reports highlights near-term challenges, but its 8% year-over-year growth in adjusted operating income (Adj. OIBDA) and a P/B ratio of 2.68 suggest undervaluation if its three-year profitability target is met. While its insider ownership is the lowest of the three, Liberty Latin America's strategic focus on cost optimization and market expansion could catalyze earnings growth, particularly in a sector where low P/E stocks often trade at discounts to intrinsic value.

Valuation and Risk Considerations

The valuation disparities among these companies highlight the importance of balancing growth expectations with risk. Figure Technology Solutions and Samsara trade at premium multiples, reflecting their disruptive technologies but also exposing investors to volatility if growth falters. Liberty Latin America's lower P/E and P/B ratios, meanwhile, imply a margin of safety but require patience for its turnaround to materialize. Academic studies caution that excessive insider ownership can lead to overinvestment or short-termism, emphasizing the need for rigorous due diligence on corporate governance practices.

Conclusion

High insider ownership, when paired with strong earnings growth and strategic innovation, can serve as a powerful catalyst for long-term value creation. Figure Technology Solutions, Samsara, and Liberty Latin America each illustrate different facets of this dynamic: FIGR's disruptive fintech model, IOT's operational turnaround, and LILA's turnaround potential. For investors, the key lies in assessing whether these companies' valuations reflect their growth trajectories and whether insider alignment enhances, rather than distorts, corporate decision-making. As the data suggests, the intersection of insider ownership and earnings momentum may well define the next generation of high-performing growth stocks.