Stocks With Insider Buying, Buybacks: DTV
Updated from 5:51 a.m. EDT
Part of the philosophy of Stockpickr is to follow in the footsteps of smart people. This could mean a few different things.
Sometimes it means piggybacking great investors such as Warren Buffett or George Soros. Other times it means buying what the CEOs, employees and directors of a company are buying. These are people who know the intimate details of their companies far better than you or I do.
The perfect setup is when one of these company insiders or an entire board (in the case of a stock buyback) is buying shares at the same time that some smart, savvy investors are.
Each Thursday we update the Stockpickr
Top 10 Insider Purchases and Buybacks
portfolio, featuring the stocks of the week with either big insider purchases or newly announced buybacks as well as "smart money" accumulating shares.
One of the stocks in this week's portfolio is
DirecTV
(DTV)
. The ElSegundo, Calif.-based digital TV provider recently announced first-quarter results alongwith a plan to increase its buyback program to $3 billion. Duringthe quarter, the company spent $160 million repurchasing shares.It didn't offer an expiration date for the buyback.
DirecTV reported impressive first-quarter earnings.During the quarter, revenue jumped 17% to $4.6 billion; U.S. revenueincreased 14% while Latin America revenue soared 47% to $542 million.Free cash flow nearly doubled, from $262 million to $505 million. Netincome was $371 million, a 10.4% increase from the $336 million reportedin the same period last year.
Operating performance was exceptionally strong in Latin America, wherethe company added 200,000 subscribers during the quarter. The largesubscriber addition and favorable exchange rates forced operatingprofit up 73% to $138 million. DirecTV now owns 74% of Sky Brazil,41% of Sky Mexico and 100% of PanAmericana, which covers the rest ofthe region.
President and CEO Chase Carey said: "We expect 2008 to be a year inwhich we take DIRECTV to a whole new level in terms of profitabilityand cash flow growth. We took an important step toward this goal inthe first quarter as DIRECTV U.S. generated $603 million in cash flowbefore interest and taxes, representing a 76% increase over the prioryear."
We like to see that Deutsche Bank reiterated its buy rating on thestock and increased its price target by $2 to $36. The analysts fromDeutsche Bank believe that DirecTV offers a significant advantage in HD; stronggrowth, especially in Latin America; peaking costs; and positive effectsform the buyback. They also believe the stock is trading inexpensively.
is a well-regarded investorwho owns DirecTV. He has been in the investmentbusiness for more than 25 years and manages Southeastern Asset Management, whichcontrols over $31 billion in assets. He recently opened new positions in
Limited Brands
(LTD)
and drugstore chain
Walgreen
(WAG)
.
Another noteworthy firm that likes DirecTV is
. Founded in 1980 byPaul Tudor Jones II, the firm currently manages $15.4 billion. Its investment strategies include global macro trading, fundamentalequity investing in the U.S. and Europe, emerging markets, venturecapital, commodities, event-driven strategies and technical tradingsystems. It recently bought
(GOOG) - Get Report
and electric powercompany
Entergy
(ETR) - Get Report
.
So we have a buyback, excellentearnings, a buy rating with increased targets, and two successfulinvestors into the stock. It may be time to take a closer look atDirecTV.
Next on the list is
Polycom
(PLCM)
. The communications equipment maker recentlysaid its board approved the repurchase of up to $300 million in commonstock. As of March 2008, the company had approximately $80 millionremaining under its previous buyback plan and about 88.5 million shares outstanding. The timing and amount of the repurchases will depend on market conditions.
The Pleasanton, Calif.-based company reported first-quarter revenueof $258.9 million, compared with $192.7 million for the first quarter of2007. The company experienced net income of $14.2 million, or 16cents a share, an increase of 39% from $10.2 million, or 11 cents ashare, in the same period last year. During the quarter, the companyrepurchased $60 million worth of its own common stock.
"With our new and incremental $300M share repurchase program announcedtoday, we reaffirm our confidence in the long term value of thecompany and our continued focus on enhancing shareholder value," saidRobert Hagerty, chairman and CEO.
Analysts at Kaufman Brothers reiterated their buy rating on Polycombecause they see upside potential in the stock. They note thatwith $352 million in free cash at the end of the first quarter, thecompany can easily handle the buyback. The analysts believe that thecurrent stock price provides an attractive entry point to being a leaderin the video conferencing market and that the company should exhibit strong growth overthe next several years.
We also like to see that one of the most successful hedge funds,
, owns Polycom. Started by Jim Simons in 1982, this $5 billionfund has averaged 38% annual returns since 1989. It also likes
Lockheed Martin
(LMT) - Get Report
and
GlaxoSmithKline
(GSK) - Get Report
.
It's also good to see that
is investing in Polycom. Founded in July 2004 by Richard Johnson and Jeff Curtis, the firm specializes in small-cap and small-mid-cap growth stocks. It also likes engineering software producer
Ansys
(ANSS) - Get Report
and
Hologic
(HOLX) - Get Report
, a medicaltech company.
So we have a buyback, strong earnings, a buy rating and two remarkable investment firms into the stock. It might be time to do some homework on Polycom.
Finally,
Alliance Data Systems
(ADS) - Get Report
makes this week's list. The Dallas-based transaction services company announced that its board reinstituted its stock buyback program. The company is authorized to repurchase up to $500 million in common stock and currently has approximately 78.5 million shares outstanding.
Alliance Data is also revising its capital structure to determine if the company is using enough debt to maximize value. Decisions regarding the amount of leverage will be made over the next few months.
Alliance Data's chief financial officer, Ed Heffernan, said: "Following the termination of the merger agreement, our focus has been on two items that we believe are critical for future success -- liquidity and earnings visibility."
After Alliance reported strong first-quarter results, SunTrust Robinson Humphrey reiterated its buy rating on the stock and set the price target at $65. The analysts believe ADS is well-positioned to outperform in 2008, and they raised their revenue and EPS estimates to reflect that. They expect 2008 revenue of $2.19 billion and EPS of $4.34.
We also like to see that the
is investing in Alliance Data. With more than 1,000 employees and $50 billion in investment capital, this firm has a significant presence in many of the world's capital markets. In its portfolio, it also holds
General Electric
(GE) - Get Report
and
Pfizer
(PFE) - Get Report
.
is another superior investment firm that is betting on Alliance Data. The $20 billion Chicago-based hedge fund was founded by billionaire trader Kenneth Griffin. Its other stock picks include
Boeing
(BA) - Get Report
and
Union Pacific
(UNP) - Get Report
.
So we have a new buyback, a buy rating and two top-of-the-line investment firms putting their money in Alliance Data. That makes for a pretty nice setup.
For more stocks and analysis, check out this week's
Top 10 Insider Purchases and Buybacks
at Stockpickr.com.
For the 10 most recent portfolios, check out:
- Top 10 Insider Purchases and Buybacks XLI
- Top 10 Insider Purchases and Buybacks XLII
- Top 10 Insider Purchases and Buybacks XLIII
- Top 10 Insider Purchases and Buybacks XLIV
- Top 10 Insider Purchases and Buybacks XLV
- Top 10 Insider Purchases and Buybacks XLVI
- Top 10 Insider Purchases and Buybacks XLVII
- Top 10 Insider Purchases and Buybacks XLVIII
- Top 10 Insider Purchases and Buybacks XLIX
- Top 10 Insider Purchases and Buybacks L
You can also review
Barron's Top Insider Purchases
from the prior week and Jim Cramer's
.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of
LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the
Financial Times
and the author of
Trade Like a Hedge Fund
,
Trade Like Warren Buffett
and
SuperCa$h
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
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