Aetna Inc. (AET) and Two IT-related Companies Register Heavy Insider Buying

Legendary Fidelity Magellan fund manager Peter Lynch once said that “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise”. This statement continues to be relevant today, which is the primary reason why Insider Monkey tracks and reports on insider trading behavior. The Insider Monkey team analyzed a series of Form 4 filings submitted with the U.S Securities and Exchange Commission on Thursday and pinpointed three companies with noteworthy insider purchases. This article will discuss the recent insider buying witnessed at the three companies in question, as well as discuss the recent performance of those companies.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

Let’s begin our discussion by looking into the insider buying registered at Akamai Technologies Inc. (NASDAQ:AKAM), which recently saw its most influential executive purchase shares. F. Thomson Leighton, co-founder and Chief Executive Officer of Akamai Technologies, reported purchasing a new stake of 18,126 shares on Wednesday at a weighted average price of $55.16 per share, which is held by the F. Thomson Leighton and Bonnie B. Leighton Revocable Trust. Akamai Technologies Inc. (NASDAQ:AKAM) is a provider of cloud services for delivering, optimizing and securing content and business applications over the internet. The internet infrastructure provider has seen its shares decline by 22% over the past 12 months, partly because of worries that the company’s main customers are internalizing their data center activities. Akamai’s officials mentioned during the company’s fourth-quarter earnings call that it will generate less revenue from its two largest customers in the Media Delivery Solutions business in the upcoming quarters, due to their increased in-house focus. The two media customers accounted for 13% of Akamai’s total revenue in 2015, a contribution that is anticipated to decline to about 6% in 2016.

Akamai Technologies generated revenue of $2.20 billion in 2015, which represented increases from $1.96 billion in 2014, $1.58 billion in 2013 and $1.37 billion in 2012. The company’s main pillar of growth involves the Akamai Intelligent Platform, the world’s largest cloud-based platform for securely distributing and accelerating web content, enterprise applications and video. Therefore, increased concerns over the fact that several large customers have been bringing their data center activities in-house may continue to put pressure on Akamai’s stock and financial performance. The stock is priced at 18.1-times expected earnings, above the forward P/E multiple of 15.3 for the Information Technology (IT) sector. The hedge fund sentiment towards Akamai declined in the fourth quarter of 2015, with the number of funds invested in the company dropping to 32 from 37 quarter-over-quarter. Philippe Laffont’s Coatue Management owns 2.21 million shares of Akamai Technologies Inc. (NASDAQ:AKAM) as of December 31.

The final page of this article discusses the recent insider buying registered at Aetna Inc. (NYSE:AET) and Acxiom Corporation (NASDAQ:ACXM).

Aetna Inc. (NYSE:AET) had not witnessed any insider buying activity for an extended period of time until this week. Gary W. Loveman, Executive Vice President and President of Consumer and Health Services, bought 8,970 shares on Tuesday at a weighted average cost of $111.45, lifting his overall holding to 9,675 shares. In July 2015, the third-largest U.S. health insurer announced that it had agreed to acquire Humana Inc. (NYSE:HUM), a deal that would create one of the largest health insurance companies in the nation. The terms of the deal stipulate that Humana shareholders will receive 0.8375 shares of Aetna and $125 in cash for each share of Humana upon the completion of the merger. Diversified health care benefits company Aetna is currently working with the U.S. Department of Justice to receive clearance for the aforementioned deal. It should also be noted that the merger has already obtained regulatory approval in 10 of the 20 states where approval of the deal is required. The multi-billion-dollar merger is anticipated to close in the second half of this year.

Aetna’s 2015 total revenue was $60.34 billion, up from $58.00 billion in 2014 and $47.29 billion in 2013. Last year’s revenue growth was mainly driven by membership growth in the company’s Government business and higher Health Care premium yields, partly offset by membership losses in Commercial Insured products. Shares of Aetna are up by 2% thus far in 2016 and currently trade at 12.6-times expected earnings, below the forward P/E ratio of 16.7 for the companies included in the S&P 500 benchmark. There were 66 hedge funds in our system with stakes in the health insurer at the end of December 2015, which held almost 9% of the company’s outstanding shares. Larry Robbins’ Glenview Capital reported owning 5.74 million shares of Aetna Inc. (NYSE:AET) in its 13F for the December quarter.

Acxiom Corporation (NASDAQ:ACXM) is yet another company that saw one of its executives buy shares this week. Richard E. Erwin, President of Audience Solutions, snapped up 23,556 units of common stock on Wednesday at a cost of $20.81 per share, boosting his overall holding to 81,208 units. The shares of the enterprise data, analytics, and software-as-a-service company have advanced by 8% in the past 52 weeks despite suffering a major pullback from early December through the end of January. The company’s business operations primarily focus on three separate segments: Marketing Services; Audience Solutions, and Connectivity. Acxiom generated revenue of $625.43 million during the nine months that ended December 31, up from $599.18 million reported for the same period of the previous year. The increase was mainly attributable to higher Connectivity revenue, which was in turn driven by the acquisition of LiveRamp in July 2014. Acxiom’s Connectivity segment, which accounted for only 11% of total revenue for the nine-month period that ended December 31, focuses on connecting client data with the marketing ecosystem. Meanwhile, the company’s Marketing Solutions revenue for the nine month period was flat year-over-year, while Marketing Services revenue decreased by .1% year-over-year. A total of 14 top money managers monitored by Insider Monkey had stakes in Acxiom at the end of 2015, stockpiling 14.40% of the company’s shares. Mariko Gordon’s Daruma Asset Management is the largest equity holder of Acxiom Corporation (NASDAQ:ACXM) within our database, with a stake of 3.26 million shares as of December 31.

Disclosure: None