Maxwell Technologies - Four Large Insider Buys this Past Week
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This is a brief follow-up to my article published a week ago (on Oct. 31) entitled “A Different Approach to Energy Efficiency.”
In that article I discussed how Maxwell Technologies, the dominant player in ultracapacitors, had had an unwarranted collapse in price, from about $20.00 to $6.30, while their acceptance and potential markets were growing enormously. This price collapse came about primarily because of their cautious guidance due to their exposure to Europe and China, which were both having economic slowdowns.
I was reluctant to write about this company again so soon, but I felt compelled to as there has been a major development in the week since I wrote that blog. Vickers reports that a director of the company has made four large insider buys at market price since my blog post was published: 30,000 shares were purchased on Wednesday, Oct. 31, 30,000 more on Thursday, 20,400 more on Friday, and 37,000 more two days ago, on Monday.
These are extraordinary insider purchases validate what I was saying. In fact, this kind of insider purchase is rare for any company. To paraphrase Peter Lynch, there are lots of reasons why insiders sell (to buy a house, to send their kids to school, to diversify, or just because they want the cash), but there is only one reason why they buy: because they think that the price will go up. And these were large, major purchases.
In fact, there have been 18 straight insider purchases by 7 different insiders since April 30, and no insider sales. None at all. These buys this week are by far the largest mounts of shares purchased.
Look around at your small technology companies, or big ones for that matter, and tell me how many have ANY insider buys, much less 18 in a row. Especially companies in alternate energy.
Let’s look at some comparable companies. I’ll start with Clean Energy Fuels, which is building out the “Natural Gas Highway” for the move to less polluting vehicles. I counted over 50 insider sales in the past year and only two buys.
Or Johnson Controls, which is in energy efficiency management consulting. The company is also a competitor of sorts to Maxwell through its manufacturing of batteries for electric vehicles, and is in other businesses besides. Since just Oct. 1 I counted 14 sales by a host of insiders. No buys.
Perhaps a technology company in another rapidly growing field, 3D printing, like 3D Systems (NYSE: DDD) will have some insider buying. 3D Systems is one of the two major players in this field, along with Stratasys. I counted about 40 insider sales in a row looking backwards in time before I quit counting. No insider buys. Now 3D Systems is a great company; it’s profitable and growing rapidly. But no insiders are buying.
Or for fiber lasers, lets look at the dominant player, IPG Photonics, another very profitable and rapidly growing company. Again, no insider buys, and thirty or so recent sales.
Clearly there is something special about Maxwell. The insiders think it is undervalued, and they should know better than anyone. At under $7.00, with a PE of 13, and an insider just buying over 117,000 shares at market price over four days in the past week, it certainly looks like a buy to me.
SaulR80683 has long positions in Maxwell, 3D Systems, and IPG Photonics. The Motley Fool owns shares of Clean Energy Fuels, 3D Systems, and IPG Photonics. Motley Fool newsletter services recommend Clean Energy Fuels, 3D Systems, and IPG Photonics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.