The number of insider buys as measured by records as recorded by iStock dropped last week to 522 from 756 the previous week. Hopefully, the lull is because boardroom members are buying Christmas presents instead of stocks. Although, it doesn't mean there aren't plenty of buys worth monitoring.
One major 3rd party buy (an individual or institution that is not involved in operating the company), is Carl Icahn's $25.46 million purchase of 1.8 million shares of Nuance Communications Inc. (NASDAQ:NUAN). It's interesting considering the billionaire investor is also involved with Apple Inc. (NASDAQ:AAPL), which uses NUAN's voice recognition - otherwise known as SIRI.
[Related -Should You Buy HP's Stellar Rebound?]
While dot connecting could be fun, iStock focuses on insider buys from people with direct involvement in managing companies, CEOs, CFOs, board members…
Regular readers of the insiders column know that we especially like buyers with a history of "getting it right." iStock is also a fan of more than one key employee/director laying out money simultaneously, which we call cluster buys.
We get both with this week's highlighted insider buying stock, Akamai Technologies, Inc. (NASDAQ:AKAM). Akamai provides content delivery and cloud infrastructure services for accelerating and improving the delivery of content and applications over the Internet in the United States and internationally.
[Related -Pandora Media Inc (NYSE:P): Improved Mobile Monetization Should Boost Profits]
Last week, Akamai Technologies CEO, Dr. F. Thomson Leighton indirectly bought (in a trust, by a spouse, etc.) 25,000 shares at $45.28 for a total investment of $1,132,000. Leighton was joined by Director, George Conrades who purchased 20,000 at a cost-average of $44.96, totaling $899,100.
Both men have bought AKAM previously in the last two years. Leighton made four earlier acquisitions with stock heading immediately higher three of the four. Longer-term, all four were handsomely p! rofitable investments. Meanwhile, Conrades stepped into the NASDAQ 100 member three times prior to last week. The director is three-for-three.
Combines, the duo is seven-for-seven in profitable trades. You cannot do it any better than that.
On the valuation front, AKAM is trading slightly below its five-year average price-to-earnings (P/E) multiple of 34.79. As we type, the P/E is 29.58 for the trailing 12 months (TTM). During the same timeframe, the tech company average EPS growth of 6.45%. Analysts see the bottom line growing more than twice that rate in the next five years at 13.50%. At its five-year average P/E, Akamai would trade at $74.80 using the 2014 consensus EPS estimate of $2.15.
We also see a slight discount on a price-to-sales basis. At this moment, the AMEX Internet Index member trades at 5.47 times sales. The norm in the last half-decade is 5.84. Based on next year's sales consensus estimate of $1.78 billion and the average P/S ratio, AKAM would price out at $58.08, which is 27.03% higher than Friday, December 13, 2013's close.
Overall: Akamai Technologies, Inc. (NASDAQ:AKAM) Leighton and Conrades history of profitable trades, plus modestly marked down P/S and P/E valuations, make AKAM an insider buy candidate worth consideration.
No comments:
Post a Comment