Zix Corporation (ZIXI): Small-Cap, Small Bets

On Jan. 2nd, Michael Dailey, Board Director at Zix Corporation (NASDAQ:ZIXI) acquired 597 shares of the company’s Common Stock. He paid $4.50 per share, and now owns 12,597 shares. Although a bet as small as his last one does not inspire the largest of confidences in the company, you should note that Dailey has been consistently adding shares to his holding every month since May of 2013, when he started a position in the stock.

Zix Corporation (NASDAQ:ZIXI)

As the title already tells, Zix Corporation (NASDAQ:ZIXI) is a small-cap email encryption services company, with a market cap slightly under $300 million. Despite its size, hedge funds and analysts seem to love it, and expect it to deliver strong growth figures over the next few years. Despite its valuation at almost 30 times its earnings might seem a little high, it becomes quite reasonable when compared to the application software industry´s average of 50.x P/E. Offering industry leading net margins and returns, added to an encouraging outlook (several multi-year contracts make profitability considerably predictable), one can understand why Dailey is placing his bets on Zix Corp.

But this insider is not the only one bullish on Zix Corporation (NASDAQ:ZIXI). More than a dozen major hedge funds hold long stakes in the company. The most confident of them all seems to be Robert B. Gillam’s Mckinley Capital Management, which owns about 1 million shares. Trailing him are Chuck Royce’s Royce & Associates and Jim Simons’ Renaissance Technologies, which hold 579,300 and 216,900 shares, respectively. Both of these funds upped their positions in the company lately. In fact, Royce raised his stakes by more than 3900% during Q3 2013.

Research firms also seem to like Zix Corporation (NASDAQ:ZIXI). On Monday, Jan. 6th, CRT Capital initiated coverage of the company and rated it as Buy case. Same is the case at Morningstar.


Disclosure: Javier Hasse holds no position in any stocks mentioned

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