John Lawrie, a Board member at Juniper Networks, Inc. (NYSE:JNPR), bought about 16,700 shares of Juniper’s stock on November 29th at an average price of $18 per share, according to a filing with the SEC. This more than doubled Lawrie’s direct holdings in the company. Studies show that stocks bought by insiders tend to outperform the market (see our report on studies on insider trading), and we think that this is partly because insiders have to be quite confident in the stock in order to buy- otherwise it would be rational for them to diversify their investments away from the company. Juniper is a $9.4 billion market cap networking and communication device company, comparable to (though obviously much smaller than) Cisco Systems, Inc. (NASDAQ:CSCO).
In the third quarter of 2012, Juniper Networks, Inc. experienced only a small increase in revenue compared to the same period in 2011. Better sales in services were mostly offset by a decline in product revenue. However, this was an improvement over the first half of the year as Juniper’s revenue was slightly lower in the first nine months of 2012 versus a year earlier. With costs generally higher, the company has seen a large decrease in net income- $17 million in the third quarter as opposed to $84 million in Q3 2011. The stock is down 21% from a year ago. The financial community seems confident that Juniper’s struggles will be short lived. At its current valuation the company is stock is valued at 51 times trailing earnings (so investors expect the company to rebound) but only 16 times analyst consensus for next year (as the sell-side forecasts better performance as well).
Billionaire Ken Griffin’s Citadel Investment Group more than doubled the size of its position in Juniper during the third quarter of the year, and reported owning 5.4 million shares at the end of September (find more of Griffin’s stock picks). D.E. Shaw, a large hedge fund managed by billionaire David Shaw, cut its stake but still owned 1.8 million shares (check out other stocks D.E. Shaw is buying and selling). As a general rule, however, Juniper Networks, Inc. wasn’t particularly popular in the hedge fund community as only one other fund- Diamond Hill Capital– reported a stock position worth over $15 million.