Insider Activity Report: Super Micro Computer (SMCI)

Shiu Chan, a director at Super Micro Computer (SMCI), recently bought 2,000 shares. The buy increased his stake by 5 percent, and came to a total cost of $1,136,000.

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  • The director also made the most previous buy with 4,000 share pickup last August, paying $1,062,280. Otherwise, company insiders have been sellers of shares over the past year, driven largely by the exercise of stock options.

    Overall, Super Micro Computer insiders own 15 percent of shares.

    The server hardware producer has soared 709 percent over the past year, far outpacing the overall stock market and even the big cap tech stocks.

    Super Micro Computer is faring well operationally, with earnings up 68 percent and revenues up 103 percent.

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  • Shares have jumped from 10 times earnings to over 52 times earnings, given how much shares have rallied in the past year.

    Action to take: Super Micro Computer shares are overbought in the short-term. While they may head higher, they could be close to a 10-20 percent pullback.

    Long-term investors should wait for less overbought conditions to buy shares in the coming months. The company does not currently pay a dividend.

    For traders, a pullback in the coming months is likely after the stock has more than doubled since January. The April $450 puts, last going for about $11.75, could see mid-to-high double-digit returns on a drop in shares from here.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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