Insiders Picking Up Global Signal

The column was originally published on RealMoney on June 8 at 10:35 a.m. EDT.

My recent tech investments are treating me very well during this strong rally, although I expect the rally to be short-lived. And even though the energy plays I left behind have also firmed recently with the oil futures, it has been a profitable rotation.

Looking to beef up my tech holdings even more, I've taken to Global Signal(GSL Quote). It's a story that combines the growing wireless industry with the comfort of a decent indicated yield.

Global Signal is the third-largest wireless communications tower company in the U.S. after its recently closed transaction with Sprint(FON Quote). It now owns, leases or manages around 11,000 towers primarily in the U.S. -- 6,600 of which come from the Sprint deal -- and over 60% of the company's towers are now located in the top 50 geographic regions, as indicated by the size of the basic trading areas they occupy.

Unlike its peers, Global Signal is organized as a real estate investment trust (REIT). As such, it is obliged to pay out much of its distributable cash flow to shareholders. The company's relatively attractive indicated yield recently stood at just over 4.5%, based on a forward projection of its latest quarterly payout of 40 cents per share. But most people familiar with the story expect that payout to increase in the coming year to at least 45 cents.

After restructuring its balance sheet and emerging from bankruptcy, the company formerly known as Pinnacle Holdings is in a good financial position to benefit from the consolidation in an industry with solid growth prospects. Although arguably fully valued on trailing financials, the expectations for Global Signal's future earnings payout could well increase after the full terms of its recent Sprint deal are known.

Insiders Send Their Own Signal

Insiders at Global Signal have shown an impressive persistence at buying their company's stock since shares began trading again back in June 2004. While Global Signal has steadily risen in price over the past year -- nearly doubling in value -- insiders have continued to average up. This very bullish pattern lends comfort that shares are not overpriced when future expectations are taken into account.