One of the great maxims of traders and Wall Street pros is to follow the "smart money."
I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.
Next up: Akamai Technologies
Foolish facts
|
Metric |
Akamai Technologies |
|---|---|
|
CAPS stars (out of 5) |
**** |
|
Total ratings |
3,115 |
|
Percent bulls |
95.6% |
|
Percent bears |
4.4% |
|
Bullish pitches |
433 out of 456 |
|
Highest rated peers |
On2 Technologies, Spark Networks, PHOTOCHANNEL NETWORKS |
Data current as of Nov. 30.
Before we get into specifics, allow me to admit a bias. I'm not only the guy responsible for recommending Akamai to our Rule Breakers subscribers; I've owned shares since March of 2004.
What made Akamai attractive back then is the same thing that makes the stock attractive today. The company's worldwide network of 77,885 servers is capable of delivering both static and dynamic content that exists on the Web for varying purposes -- from entertainment to e-commerce to corporate computing.
What's more, Akamai has fought off a number of well-funded rivals in its 11 years. Today's competitive landscape is no different than what the company has faced before. Sellers routinely miss this point.
"Despite the Netflix
Institutional ownership history
|
Top Owners |
2007* |
2008* |
2009* |
Latest* |
|---|---|---|---|---|
|
T. Rowe Price Group |
508,400 |
221,610 |
2,866,675 |
14,880,567 |
|
Fidelity Investments |
24,905,532 |
2,185,432 |
6,161,634 |
13,523,993 |
|
BlackRock |
2,200,537 |
501,749 |
8,379,910 |
9,853,014 |
|
The Vanguard Group |
6,271,963 |
7,280,977 |
7,933,385 |
8,662,600 |
|
State Street Global Advisors |
5,365,747 |
5,815,842 |
6,050,301 |
6,138,048 |
|
TOP 25 TOTAL |
59,957,666 |
44,330,581 |
72,876,221 |
100,311,277 |
Source: Capital IQ, a division of Standard & Poor's. *Indicates the number of shares owned.
As a group, institutions have been piling into Akamai for most of the past 18 months. Only recently has buying slowed. After purchasing more than 12 million shares during the June quarter, the top 25 bought just 2 million in the third quarter.
Big Money investors have good reason to like the stock. Not only is Akamai the market leader in Web content delivery, but it's also the fastest grower among peers on the basis of normalized net income. The company is also on track to end 2010 having generated $1 billion in revenue -- a first in its history.
Competitor and peer checkup
|
Company |
Institutional Ownership |
Insider Ownership |
|---|---|---|
|
Akamai |
87.61% |
3.37% |
|
AT&T |
58.62% |
0.06% |
|
F5 Networks |
97.19% |
0.54% |
|
Internap Network Services |
57.88% |
3.53% |
|
Level 3 Communications |
84.53% |
3.55% |
|
Limelight Networks |
57.26% |
12.19% |
Source: Capital IQ. Data current as of Nov. 30.
This table doesn't do Akamai's ownership profile justice. Sure, there's more room for the Big Money to pile into AT&T, but CEO Paul Sagan and other Akamai insiders are about as engaged with their business as any executive team I've seen.
For example, when the stock fell under $40 per share over the summer, Sagan and new company President David Kenny combined to purchase 40,000 shares. They're up more than 25% since.
My point? I'll worry if they reverse themselves and begin dumping shares. But not before then, and certainly not because of hyperventilating fears about competitors.
Now it's your turn to weigh in. Do you think the institutions are wrong about Akamai Technologies? Let us know what you think using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.
Interested in more info on Akamai? Add it to your watchlist by clicking here.
