This article presents an overview of Corporate Insiders are Dumping These 5 Tech Stocks. For a detailed overview of such stocks, read our article, Corporate Insiders are Dumping These 11 Tech Stocks.
5. Arista Networks Inc (NYSE:ANET)
Number of Hedge Fund Investors: 64
Arista Networks Inc (NYSE:ANET) has been seeing heavy insider selling activity lately. On March 18, Arista’s CEO Jayshree Ullal sold 20,000 shares of Arista Networks Inc (NYSE:ANET) at $282.41 per share. Since then the stock has gained about 5.3%. BofA Securities recently published a list of “breakthrough” stocks under various themes. Arista Networks Inc (NYSE:ANET) was one of these stocks under the communications theme.
As of the end of the fourth quarter of 2023, 64 hedge funds tracked by Insider Monkey had stakes in Arista Networks Inc (NYSE:ANET).
Giverny Capital Asset Management stated the following regarding Arista Networks, Inc. (NYSE:ANET) in its fourth quarter 2023 investor letter:
“We did a bit of portfolio sculpting during the year, with mixed results. We trimmed Arista Networks, Inc. (NYSE:ANET) several times during the year as it soared. Those trims, a very small one in March at roughly $163 and a larger one in August at $183, don’t look smart with Arista finishing the year at $235 (and up more in January). Arista rose 94% this year. The good news is, Arista finished the year as our second largest holding, at 7.9% of the portfolio.
If you are wondering how I could sell some Arista at $163 but then hold most of it at $235, the answer is that Arista’s outstanding competitive position in Artificial Intelligence became clearer to me as the year progressed. I felt in March that Arista would earn $8 per share in a few years. I see today that it might earn $8 in 2025.
It’s possible there is AI-related froth in the Arista stock price, but also probable that Arista will continue to grow rapidly as the computing centers that process AI queries require enormous amounts of data bandwidth. I believe Arista’s routers and switches are the best tools for routing so-called hyperscale traffic. Also, its operating software allows computer giants to manage the kudzu-like growth of their data centers, lowering their total cost of operation.
The sales of both Arista and Heico reflected my desire to manage PE multiple risk. I keep learning the hard way, however, that trimming your winners generally doesn’t add value. If the valuation is beyond justification, sell the position. If the valuation is high but the business continues to dominate its niche, grow steadily and add value for customers, maybe just take a walk around the block until the urge to sell goes away.”
