Here at the Fool, we love to see executives and directors owning a significant part of their own companies. Why? Because when the personal fortunes of insiders are closely tied to stock returns, these high-ranking business leaders should feel motivated to do everything in their power to juice shareholder returns. And when they do, it's great news for the rest of us enjoying the same amped-up investment returns that these people plot and sweat over.
Insider ownership is one of the many things that sets yesterday's 11 O'Clock Stock pick Marvell Technologies (Nasdaq: MRVL) apart from its rivals in mixed-signal processor and microcontroller design:
|
Company |
Insider Ownership |
CAPS Rating (out of 5) |
|---|---|---|
|
Marvell |
13% |
**** |
|
Broadcom (Nasdaq: BRCM) |
9.5% |
*** |
|
Atmel (Nasdaq: ATML) |
2.8% |
*** |
|
TriQuint Semiconductor (Nasdaq: TQNT) |
0.7% |
***** |
|
LSI (NYSE: LSI) |
0.2% |
*** |
|
Texas Instruments (NYSE: TXN) |
0.2% |
**** |
Source: Capital IQ, a division of Standard & Poor's.
There isn't a pure-play chip designer available today with more robust insider holdings than Marvell. Co-founders Sehat and Pantas Sutardja are the big owners, holding 7.2% and 5.8% of Marvell's shares outstanding, respectively. Beyond that, the Sutardja Family Partners trust owns an additional 2.8%. Sehat is the company's CEO, chairman, and president; Pantas serves as CTO. If these holdings don't inspire the Sutardja brothers to work their butts off for the good of common shareholders, I don't know what would.
In this context, the opportunistic $500 million share buyback program looks even better. With this much skin in the game, Marvell's leaders would be crazy to overpay for these shares. You have to assume that the Sutardjas have done their homework and feel supremely confident in positive returns on this investment. That means you'd be smart to look into this stock for your own portfolio.
