Put five Fools in a room, ask them how they invest, and you'll likely get five different answers. Some like growth, others value, or small caps, or dividends, or, well, you get the picture.
Yet, while our styles differ, we all want excellent, engaged managers running the companies we own. We like it even more when these managers are also owners -- investors like you and me who, in trying times like these, are willing to buy as others sell. That's why I write this column weekly.
The week's buying
So which rich executives are buying now? Have a look, courtesy of our friends at Form 4 Oracle:
|
Company |
Closing Price 12/9/08 |
Total Value Purchased |
52-Week Change |
|---|---|---|---|
|
Akamai Technologies |
$13.96 |
$1,140,976 |
(64.2%) |
|
Global Industries |
$3.33 |
$3,183,701 |
(85.4%) |
|
TBS International |
$6.47 |
$902,828 |
(85.2%) |
|
Visa |
$53.53 |
$705,462 |
(4.9%)* |
|
Walter Industries |
$16.79 |
$201,085 |
(54.9%) |
Sources: Fool.com, Yahoo! Finance, Form 4 Oracle.
*Visa began trading on March 19, 2008.
Can Akamai still deliver?
Talk about a crazy week. At the same time that industry watcher Dan Rayburn was reporting that longtime Rule Breakers recommendation Akamai had been haphazardly cutting prices, company co-founder Tom Leighton bought 100,000 shares.
Call it a bull versus bear showdown. So far, the bears are winning -- just look at those returns! Those bears include CAPS investor Internettech, who predicted massive price cuts over the summer:
Both [Level 3 Communications
(NASDAQ:LVLT) ] and [AT&T] have recently deployed new working content management networks that are in place and will be getting customer wins happily with prices that are half of what Akamai charges. The difference is that they are both running global networks alongside the CDNs which Akamai does not. Moreover, they have deeper pockets to invest in the new faster, emerging hardware.
Our 120,000-strong Motley Fool CAPS community mostly disagrees:
|
Metric |
Akamai |
|---|---|
|
CAPS stars (5 max) |
**** |
|
Total ratings |
2,410 |
|
Bullish ratings |
2,307 |
|
Percent Bulls |
94.9% |
|
Bearish ratings |
103 |
|
Percent Bears |
5.1% |
|
Bullish pitches |
360 |
|
Bearish pitches |
17 |
Data current as of Dec. 10, 2008.
Strong numbers, to be sure. Yet if Rayburn is right -- if Akamai is relying on random price cuts to preserve market share -- it's a poor sign. Not that price cuts in general bother me. What's troubling is Akamai's apparent lack of pricing discipline.
Does that mean that you or I should sell Akamai in a panic? Of course not. The underlying business is performing far too well. Returns on invested capital are rising even as margins come under pressure -- an excellent indicator.
What's more, Akamai's newer, high-margin businesses, such as application acceleration and ad delivery, aren't easily duplicated. Roughly half of new customers were buying enhanced services in the third-quarter, Chief Financial Officer JD Sherman told analysts in announcing results.
Finally, if President-elect Obama gets his way, and 95% of Americans are given access to free broadband Internet, we'll see an explosion of content that could substantially increase demand for CDN services. Emerging players and infrastructure suppliers could find themselves racing to catch a curl that Akamai, Level 3, and Limelight Networks
So, sure, be cautious. Fools always are. But don't ignore the whole story, either. Leighton, a MIT professor, isn't $1.1 million stupid. He's buying for a reason.
There's your update. See you back here next week when we dig through more insider filings in search of the next home run stock.
Get the inside scoop on stocks of all sizes:
- Find out which executives were buying last week.
- And here's a look at those who've been selling.
- This could be your once-in-a-lifetime investing opportunity.
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- Why you should buy the market's cheapest stocks.
