Daniel Hai

About the Author Daniel Hai

I am a financial quant analyst using systematic data to identify investment opportunities in the long and short term. I write about stocks, ETF's, commodities and currencies. I hold an economics degree from the university of Berlin and specialize in C#/VBA trading algorithms.

Pacific DataVision Inc (PDVW): Insiders Are Going Wild For This Small Cap

Pacific DataVision Inc (NASDAQ:PDVW) uses patented technology to improve communication across a wide spectrum of industries such as transportation, distribution, construction, hospitality, waste management and field service. After raising over $218 million in private equity, the company used the cash to acquire Sprint’s 900 MHz Spectrum licenses. The company hopes to use the remainder of the funds to open the largest push-to-talk (PTT) network in the United States.

The company currently has $175 million in cash as of June 30, 2015 (as indicated by the last financial report). Furthermore, their cash flow statement indicates that in the three- month period, they made a net loss of $7.4 million based on operating activities alone. A rather small amount of $1.4 million was used for investing activities. In May 2015 they raised additional funds through equity which resulted in an additional $56 million through financing activities. Finally, they also filed with the Federal Communications Commission (FCC) for the administration and sequence of the proposed realignment of the 900 MHz band.

So why does this stock particularly jump out from the rest? TipRanks identified an analyst (Gregory Miller) from Canaccord Genuity which recommended buying the stock 14 days ago. While his price target of $79 seems a little far reaching, there are some indicators which would suggest perhaps not.

Insiders (CEO’s, CFO, Owners or any other person of interest) are obliged to report all their purchases and sales of any security to the SEC by submitting a form 4 up to two business days following the transaction. The system’s algorithms measures when a major event occurs, such as an owner buying or selling stock. Historically the average return of that stock in the following month is 4.38%. In the last 14 days our system identified 7 insider buys for Pacific DataVision, all by owners, and all for substantial sums.

This is particularly interesting due to the company’s huge cash reserve. With a very low risk of running out of cash any time soon, the owners have little to no reason of infusing further funds in other than a very strong indication for a value increase. Interestingly, the largest transaction was made by Owl Creek Asset Management. Their historical transactions record indicates that their insider investments went up an average of 8.9% in the one-month following their purchase (or short sell).

With large cash reserved and constant stock purchases from the owners in the last couple month, alongside Owl Creek’s consistent historical record and Canaccord Genuity’s bullish forecast, this stock stands out particularly well.


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