EC Insider Trading Report Edition 307: Notable Buys And Sales

P/E: 17.81 Forward P/E: 11.86 Industry P/E: 16.09
P/S: 7.21 Price/Book: 2.29 EV/EBITDA: N/A
Market Cap: $3.38B Avg. Daily Volume: 1,533,540 52 Week Range: $33.66 – $54.96

3. Seagate Technology Public Limited Company (STX): $19.07

Chairman and CEO Stephen J. Luczo acquired 200,000 shares of this data storage company, paying $20.08 per share for a total amount of $4.02 million. These shares were purchased indirectly through a trust.

This large insider purchase by the CEO did little to inspire investor confidence as the stock dropped another 9.5% last week (adjusted for the juicy 63 cents per share dividend paid on May 6th) following a big plunge in April. The stock has lost nearly half its value since the start of this year, plunging beyond competitor Western Digital’s (WDC) 38% drop as you can see from the chart below.

Seagate Western Digital YTD Performance

Western Digital is in the midst of a large merger with SanDisk (SNDK) as it attempts to diversify away from hard disk drives. Concerns about a big shift from hard drives to solid state storage or flash drives has plagued both Seagate and Western Digital for over a decade and both stocks appear to be perpetually cheap. Those concerns remained unfounded for a long time because of the huge cost difference between hard disk drives and solid state drives (SSD). Investors in both Western Digital and Seagate did well through the end of 2014. Things have started changing recently as SSD adoption has grown (I am typing this on a computer with a SSD) and costs have come down for SSDs without reaching full parity with hard drives.

As a little experiment I decided to configure some high end servers on Dell, checked out dedicated server hosting through Rackspace (RAX) and looked at data storage product offerings from EMC. The Dell severs continue to offer hard drives along with hybrid systems that employ both hard drives and SSDs. The Rackspace servers I checked out offered hard drives as well while EMC prominently featured SSD based storage systems.

Given the small sample size and quick checks, this can be considered as no more than anecdotal evidence but it was interesting to see that enterprise systems continue to use both hard drives and SSDs. Whether Seagate and Western Digital manage to make this transition from hard drives to SSDs remains to be seen and that is why the stocks continue to remain cheap.

You can view the list of recent insider transactions for Seagate Technology Public Limited Company here.

P/E: 9.61 Forward P/E: 9.78 Industry P/E: N/A
P/S: 0.49 Price/Book: 3.26 EV/EBITDA: 4.75
Market Cap: $5.69B Avg. Daily Volume: 7,063,260 52 Week Range: $18.81 – $57.88
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Disclosure: Clients of Signal Partners, LLC  and I may have positions in ...

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