Insiders Are Buying Digital Realty Trust

Nov.19.13 | About: Digital Realty (DLR)

In this article, I will feature one REIT that has seen intensive insider buying during the last 30 days. 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%.

Digital Realty Trust (NYSE:DLR), a real estate investment trust (REIT), focuses on delivering customer-driven data center solutions by providing secure, reliable and cost-effective facilities that meet each customer's unique data center needs.

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Insider buying during the last 30 days

Here is a table of Digital Realty's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Edward Sham SVP Nov 15 4,225 4,225 shares from 0 to 4,225
Dennis Singleton Director Nov 14-15 5,784 5,784 shares from 0 to 5,784
Laurence Chapman Director Nov 1-8 20,000 74,994 shares +36.4%
Joshua Mills SVP Nov 1 5,200 5,200 shares from 0 to 5,200
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There have been 35,209 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Digital Realty's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
November 2013 35,209 0
October 2013 0 0
September 2013 10,000 0
August 2013 12,200 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 0 5,080
March 2013 0 5,509
February 2013 0 2,806
January 2013 0 0
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There have been 57,409 shares purchased and there have been 13,395 shares sold by insiders this year. The month of November has seen the most insider buying.

Financials

Digital Realty reported the third-quarter financial results on October 29 with the following highlights:

Revenue $379.5 million
Net income $138.9 million
Cash $55.1 million
Debt $4.8 billion
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(Source: Earnings presentation)

Outlook

On October 29, Digital Realty revised its 2013 FFO per share outlook to $4.60-$4.62 down from $4.73-$4.82 previously, and revised its 2013 core FFO per share outlook to $4.65-$4.67 down from the prior range of $4.74-$4.83.

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(Source: Earnings presentation)

Competition

Digital Realty's competitors include CoreSite Realty (NYSE:COR), and DuPont Fabros Technology (NYSE:DFT). Here is a table comparing these companies.

Company DLR COR DFT
Market Cap: 6.19B 645.21M 1.54B
Employees: 702 316 93
Qtrly Rev Growth (yoy): 0.44 0.13 0.13
Revenue: 1.57B 228.65M 357.25M
Gross Margin: 0.65 0.60 0.68
EBITDA: 930.84M 94.90M 217.70M
Operating Margin: 0.32 0.14 0.38
Net Income: 273.42M 9.23M 16.28M
EPS: 2.16 0.43 0.25
P/E: 22.34 72.07 94.62
PEG (5 yr expected): 1.30 1.09 7.27
P/S: 3.93 2.82 4.32
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Digital Realty has the second-lowest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
COR 0 24,095
DFT 0 238,052
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Only Digital Realty has seen intensive insider buying during the last 30 days.

Conclusion

There have been four different insiders buying Digital Realty and there have not been any insiders selling Digital Realty during the last 30 days. All four of these insiders increased their holdings by more than 10%. Digital Realty has an insider ownership of 0.10%.

There are 11 analyst buy ratings, eight neutral ratings, and zero sell ratings with an average price target of $56.63. Digital Realty has a book value of $28.37 per share and the stock has a dividend yield of 6.48%. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DLR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.