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Insider Cluster Buy Reported in Iron Mountain as Its REIT Conversion Ruling Is Delayed

June 17, 2013 | About:
Monica Wolfe

Monica Wolfe

119 followers
Share prices took a rather large tumble earlier this month, and insiders of Iron Mountain (IRM) have been recently taking advantage of these lower prices in order to increase their stake in the company. Four insiders made buys on June 7 as the share prices hit a two-year low.

Insider Activity

President and CEO William Meaney bought 12,000 shares at an average price of $29 per share. This transaction cost the CEO a total of $348,000. Since his buy, the price per share has dropped approximately 0.24%.

Director Arthur Little bought 1,800 shares of Iron Mountain at an average price of $29.01 per share. This cost the director a total of $52,218. Since this transaction, the price per share has dropped an additional 0.28%. Little currently owns at least 5,640 shares of Iron Mountain.

Director Ted Antenucci made the second largest buy of the day, adding 5,800 shares. These shares traded at $29.00 per share for a total transaction amount of $168,200. Antenucci currently holds at least 8,968 shares of Iron Mountain.

Lastly, CFO Brian McKeon bought 3,600 shares of Iron Mountain at an average price of $28.61 per share. The CFO spent a total of $102,996 on this insider transaction. Since his buy, the price per share has increased approximately 1.12%. McKeon holds at least 10,991 shares of IRM.



These insider buys came as the share price of IRM hit a 52-week low.

About Iron Mountain

Iron Mountain is the global leader for information protection and storage services. The company delivers expertise in reducing the costs and mitigating the risks associated with the protection and storage of their information assets.

Iron Mountain News

In 2011, Iron Mountain began the process towards becoming a REIT, but last week the IRS began raising questions about its planned conversion. These questions have resulted in the delay of approval or denial of Iron Mountain’s conversion request.

As a result of the delay, the stock price dropped 15% and over $5.00 per share on June 6.

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Iron Mountain had the following to say about the IRS’s delay in ruling:

The Company has recently been informed by the IRS that the IRS formed a new internal working group (the "Working Group") to study the current legal standards the IRS uses to define "real estate" for purposes of the REIT provisions of the Code and what changes or refinements, if any, should be made to those current legal standards.

And that IRM also believes:

One or more of the following are the most likely explanations: (1) the IRS was simply undecided, under current legal standards, on whether the Company's racking structures are properly characterized as "real estate" for REIT purposes, (2) the IRS sought greater clarity of the underlying facts and additional input on technical points of law, and/or (3) the IRS did not want to issue a ruling, either favorable or adverse, on the Company's racking structures until the Working Group completed its study.

Iron Mountain Financials

Iron Mountain has a market cap of $5.5 billion; its shares were traded at around $28.89 with a P/E ratio of 37.90 and a P/S ratio of 1.70. The dividend yield of Iron Mountain stocks is 3.70%. The company had an annual average earnings growth of 7.4% over the past 10 years. GuruFocus rated Iron Mountain the business predictability rank of 3-star.

On June 6, declared a cash dividend of $0.27 per share. This dividend is payable on July 15 to shareholders of record at the close of business on June 25, 2013.

The company’s first quarter financial statement reported:

· Free cash flow of $50 million, up from $24 million in the first quarter 2012.

· Total revenue of $747 million.

· EPS was $0.27 per share, compared with $0.29 per share in the first quarter 2012.

There are currently seven gurus that hold stake in Iron Mountain. Click here to see their holding histories.

Iron Mountain’s historical P/S and P/B ratios:

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Iron Mountain’s historical price and P/E ratio:

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According to Peter Lynch’s Valuation Chart, Iron Mountain appears to be overvalued:

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The analysis of Iron Mountain reports:

· The company has issued $452.809 million of debt.

· The company has shown predictable revenue and earnings growth.

· The operating margin has been expanding.

· The dividend yield is near a 5-year high.

· The P/S ratio is close to a 2-year low of 1.66.

Click here to learn more about Iron Mountain and the happenings in the company.

Rating: 4.7/5 (3 votes)

Comments

Dr. Paul Price
Dr. Paul Price premium member - 1 year ago


While IRM management says the IRS ruling has 'been delayed' they fail to even mention the possibility that it could be DENIED.

The REIT conversion is a tax avoidance scam. The IRS is finally trying to stop corporate abuses of this supposed loophole.

Do not count on the approval coming through at all. If you wouldn't own Iron Mountain in its present form you shouldn't buy it.

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