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Wednesday, January 10, 2007

Calls of Note Part 4

- First Albany notes MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor held slightly over 3 million class A and class B shares as of March 31, 2006, the date of the company's most recent proxy statement. However, during 4Q:06, they estimate Mr. Saylor sold nearly 360,000 of his shares, representing 11.9% of his total MSTR holdings. Comparatively, he sold approximately 61,000 shares in all of 2005 and just over 20,000 shares in all of 2004.

The insider selling probably represents prudent diversification of assets, as MSTR shares have appreciated 2,260% in the past 4.5 years. However, it is difficult to entirely dismiss the insider sales (given the escalation in size), particularly if the company has switched from a state of accretive corporate buybacks, to substantial insider selling.

Regarding Q4, feedback indicates good traction, particularly in the retail vertical, and a willingness to let some deals slip to avoid pricing concessions at year-end. Firm is somewhat more cautious on 2007 citing valuation, margin compression and "below-industry" license revenue growth.

Reits Buy and $135 tgt for now.

Notablecalls: Mixed emotions regarding MSTR here. The level of insider selling isn't THAT bad and business looks to be humming nicely. I don't think MSTR is a short off of these comments. The chart looks to be agreeing with bulls as well.

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