ConocoPhillips (COP) and 2 Small-Cap Companies Are Targets of Insider Buying

Lumos Networks Corp (NASDAQ:LMOS) had one influential member of its Board of Directors buy shares last week, so let’s figure out whether the insider made a reasonable move or not. Chairman Robert E. Guth purchased 10,000 units of common stock on Wednesday at prices that ranged from $12.38 to $12.50 per share, which lifted his overall holding to 59,110 shares.

Lumos Networks is a fiber-based bandwidth infrastructure and service provider in the Mid-Atlantic region. The company primarily offers services to carrier and enterprise customers, which include healthcare providers, local government agencies, financial institutions, educational institutions, and other entities. Shares of Lumos are down by 19% over the past 52 weeks, but are up by 12% in 2016. The company’s data segment accounted for 56% of total revenue in 2015, totaling $114.31 million, which was up from $106.64 million reported for 2014. The 7.2% revenue growth in this segment was mainly driven by increases in long-term contracts with U.S wireless carriers, the addition of second tenants to existing connected cell towers, bandwidth upgrades, new enterprise contracts, and higher rates of renewal with existing customers. This segment represents the company’s primary growth opportunity and the main pillar of its strategy, so the recent growth experienced in this segment is a promising sign for investors. Lumos Networks’ enterprise data, transport and Fiber to the Cell site (FTTC) product and service groups, which actually comprise the whole data segment, are associated with higher gross margins than other product lines. The company faces high competition from incumbent local exchange carriers (ILECs), broadband services providers, incumbent cable operators, and fiber providers. Therefore, the fast-toughening competition could result in pricing pressures, lower customers, reduced operating margins and lower market share. There were ten hedge funds in our system invested in Lumos at the end of 2015, with them owning 19.30% of the company’s outstanding common stock in aggregate. Dov Gertzulin’s DG Capital Management trimmed its stake in Lumos Networks Corp (NASDAQ:LMOS) by 20% during the December quarter, ending the year with approximately 478,000 shares.