Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

There was intensive insider buying in Nokia (NYSE:NOK) in July 2012 when the stock was trading below $2. The stock ran as high as $4.90 on January 23 or 200.6% above the low made in July 2012.


(Click to enlarge)

With this episode in mind, I screened for stocks which have seen recent intensive insider buying. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

In this article I will feature two tech stocks that have seen intensive insider buying during the last 30 days.

1. Zix Corporation (NASDAQ:ZIXI) provides email encryption and data loss prevention solutions to the healthcare, financial services, insurance, and government sectors in the United States.


(Click to enlarge)

Insider buying by insider (last 30 days)

  • Michael Dailey purchased 5,000 shares on May 14 and currently holds 5,000 shares or less than 0.1% of the company. Michael Dailey joined ZixCorp's Board of Directors in January 2013.
  • Mark Bonney purchased 5,000 shares on May 13 and currently holds 5,000 shares or less than 0.1% of the company. Mark Bonney joined ZixCorp's Board of Directors in January 2013.
  • Maribess Miller purchased 2,000 shares on April 29 and currently holds 2,000 shares or less than 0.1% of the company. Maribess Miller was elected to ZixCorp's Board of Directors in April 2010.

Insider buying by calendar month

Here is a table of ZixCorp's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
May 2013 10,000 0
April 2013 2,000 0
March 2013 8,030 30,000
February 2013 0 40,000
January 2013 0 0

The month of May has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on April 23 with the following highlights:

Revenue $11.8 million
Net income $0.6 million
Cash $24.2 million

Outlook

  • For the second quarter 2013, the company forecasts revenue to be between $11.5 million and $11.7 million and fully diluted adjusted earnings per share to be $0.03 to $0.04.
  • For the full year 2013, the company forecasts revenue to be between $48 million to $50 million and fully diluted Non-GAAP adjusted earnings per share to be $0.19 to $0.20.

Competition

ZixCorp's competitors include Cisco Systems (NASDAQ:CSCO) and Proofpoint (NASDAQ:PFPT). Here is a table comparing these companies.

Company ZIXI CSCO PFPT Industry Average (Application Software)
Market Cap: 235.32M 127.12B 641.82M 470.39M
Employees: 144 66,639 487 778.00
Qtrly Rev Growth (yoy): 0.14 0.05 0.25 1.32
Revenue: 44.82M 47.88B 112.44M 91.77M
Gross Margin: 0.83 0.61 0.70 0.73
EBITDA: 9.97M 13.52B -13.99M 28.63M
Operating Margin: 0.19 0.23 -0.19 0.22
Net Income: 9.14M 9.63B -22.00M N/A
EPS: 0.14 1.80 -0.71 0.20
P/E: 27.43 13.24 N/A 25.78
PEG (5 yr expected): 0.95 1.28 N/A 0.70
P/S: 5.21 2.67 5.62 5.13

ZixCorp's P/S ratio is in line with the industry average.

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 1.12%. There are three analyst buy ratings, zero neutral ratings and zero sell ratings, with an average target price of $5.33. The stock is trading at a P/E ratio of 27.43 and a forward P/E ratio of 16.61. The company has a book value of $1.01 per share. The 200-day moving average is currently at $3.12, which could be a good entry point for the stock.

2. Entropic Communications (NASDAQ:ENTR), a fabless semiconductor company, designs, develops, and markets semiconductor solutions to enable home entertainment.


(Click to enlarge)

Insider buying by insider (last 30 days)

  • Keith Bechard purchased 15,000 shares on May 17 and currently holds 43,418 shares or less than 0.1% of the company. Keith Bechard serves as a director of the company.
  • David Lyle purchased 10,000 shares on May 3 and currently holds 33,809 shares or less than 0.1% of the company. David Lyle is Entropic's chief financial officer.
  • Lance Bridges purchased 20,000 shares on May 3 and currently holds 96,073 shares or 0.1% of the company. Lance Bridges is Entropic's senior vice president and general counsel.

Insider buying by calendar month

Here is a table of Entropic's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
May 2013 45,000 0
April 2013 0 0
March 2013 0 0
February 2013 16,000 0
January 2013 0 0

The month of May has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on April 30 with the following highlights:

Revenue $74.5 million
Net loss $2.4 million
Cash $92.2 million

Outlook

In Q2, the company expects top line revenue to be in the range of $70 million to $73 million, a 2% to 6% sequential decline from Q1. GAAP loss per share is expected to be $0.05 in Q2. Entropic expects its cash and investments balance at the end of the second quarter to remain approximately flat at $178 million or $1.93 per share.

Looking out into the second half of 2013, the company expects the combination of second half seasonal strength, increased HD penetration, as well as international market expansion will provide growth for Entropic.

Competition

Entropic's competitors include Broadcom (NASDAQ:BRCM) and LSI Corporation (NASDAQ:LSI). Here is a table comparing these companies.

Company ENTR BRCM LSI Industry Average (Semiconductor - Broad Line)
Market Cap: 399.48M 21.31B 3.96B 7.07B
Employees: 693 11,300 5,080 26.10K
Qtrly Rev Growth (yoy): 0.26 0.11 -0.09 1.80
Revenue: 337.03M 8.01B 2.45B 3.74B
Gross Margin: 0.49 0.49 0.50 0.34
EBITDA: 11.70M 1.23B 366.19M 473.00M
Operating Margin: -0.00 0.10 0.08 0.04
Net Income: -1.78M 822.00M 139.46M N/A
EPS: -0.02 1.43 0.24 0.00
P/E: N/A 26.17 30.27 61.99
PEG (5 yr expected): 4.45 0.84 0.90 1.58
P/S: 1.18 2.67 1.62 1.33

Entropic's P/S ratio is in line with the industry average.

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 0.20%. There are six analyst buy ratings, five neutral ratings and two sell ratings, with an average target price of $5.39. The stock is trading at a forward P/E ratio of 20.00. The company has a book value of $3.61 per share, which could be a good entry point for the stock.

Source: 2 Tech Stocks With Recent Intensive Insider Buying