Telecom Ramblings

As followers of the colocation and data center sector know, DuPont Fabros (DFT: chart, news) has been struggling with the credit markets since the crisis began.  They have suspended construction at several locations after being unable to raise the funds to complete the projects, and those sites now sit in limbo.  The uncertainty has just killed the stock price of course.  I do keep an eye on the company but not a close one, so it was only when a reader alerted me to the sustained insider activity over the last two months that I took a closer look.  I fully expected to see a token purchase here or there.  You know what I mean, the orchestrated ‘lets all buy a little stock to show everyone we believe in the company’ kind.  But I was surprised, it seems to go well beyond that. 

To summarize the activity since November 11:

Name	Position	Purchased	Current Total
Lammot J duPont	Executive Chairman	30K	125K
Mark L Wetzel	CFO	73K	100K
Richard A Montfort Jr	General Counsel	3K	20K
Frederic V Malek	Director	200K	202K
Michael A Coke	Director	88K	100K
Mark Amin	Director	100K	150K
John H Toole	Director	44K	44K

Apparently, these directors and officers of the company have been to the buffet table for seconds and thirds. And of course, they started just after the stock finished cratering in early November:

Adding it all up, that is 539K shares, which means that these seven insiders have picked up a full 1.5% of the company since early November, far beyond any token gesture. Five of them bought more shares than they had previously owned.

The conclusion?  These guys aren’t too worried about the DuPont Fabros’s issues with the credit markets, at least in the long term.  They clearly think the selling is overdone, and at a marketcap of $73M I think they’re right.  In the short term who knows, but as long as a lack of access to credit doesn’t cause an implosion then eventually the value of the business will be reflected in the stock price.  The insider activity is clearly a vote that there is no imminent doom.