David -
I have owned this stock since around the IPO,in May '93, so I'm pretty familiar with the trading history of WIND.
From my experience, you are mostly correct in your assumption. It is very typical for WIND to do it's own thing vis a vis the market. It's one of the reasons I like owning the stock. It is more often than not uncorrelated with the overall market, and usually uncorrelated with the tech market as well. Many days, such as today, the techs stage an overall rally, and WIND winds up unchanged or even down for the day. But WIND also shows tremendous resiliance in the face of down days. It often bucks the trend, and winds up unchanged or even up during broad market selloffs.
My thinking on this is that WIND benefits from uniquely "non-market" type investors. People who are very familiar with RTOS industry, and the tremendous realized growth and even greater potential growth in the industry. It's a long term story that continues to develop, with the associated royalty streams just beginning to get noticed in the marketplace. This type of value play that also generates huge earnings growth creates an environment for long-term, committed holders. Just look at the names on this thread to see who likes the story.
Allen Benn. Jerry Fiddler. David Wilner. Ron Ableman. A group of AIM mutual funds. Myself. All for the most part, long term owners, who have been heavily involved in the story from a very early stage.
However, there are also things going on in the stock that are keeping the value capped in the short term. As I addressed to Allen in a previous post, it is of particular concern to me that many of these directors, namely Ron Abelman, Jerry Fiddler, and Richard Kraber, the other WIND employees, and most importantly, David Wilner, have been selling their shares as part of an ongoing program. This creates two potential worries.
Number 1. A continual supply overhang on the stock, to the tune of 400,000 shares every year as option grants become vested and convert into floatable shares.
Number 2. Even more important, the troublesome fact that many of the directors, indeed the people such as Wilner that have created most of the shareholder value during the past 2 years, are diversifying substantial portions of their stock.
As a former Wall Street trader, I understand the value behind diversifying one's portolio. Particularly in the case of people who have close to 100% of their net worth tied up in the stock. But companies such as MSFT and NIKE attained market dominance in part because their management was willing to bet their entire future on the success of the company. Should we interpret the insider selling at WIND as merely prudent diversification, or is there something else to it? I don't have the answers, but would love to hear anyone else's thoughts on the subject.
What do you think?
Regards.
Jason Cogan |
