​Insider Buying Reinforces The Bull Thesis For Vuzix

Mark Collins  |

At the start of November, I took this look at Vuzix (VUZI). In the article, I highlighted the company's pilot program expansion and growing patent portfolio as a potential growth driver over the coming twelve months. During the six weeks or so since my highlighting of the stock, a flurry of insider buying has taken place, serving to reinforce my longer-term bull thesis with aligned insider interest.

Here's a look at who is doing the buying and what's happened in the background since the start of last month.

So, for anyone new to Vuzix, this one is a technology company that (primarily) is in the business of designing, developing and selling augmented reality (AR) hardware and, specifically, smart glasses type technology.

As I outlined last time, Vuzix is something of an under the radar play in this space (as compares to some of the household name tech companies like Apple Inc. (AAPL), Samsung Electronics Co Ltd (SSNLF), etc.) because the company has allocated most of its time and efforts towards targeting the enterprise side of the market, as opposed to the consumer side.

And this focus has paid off. Vuzix's lead enterprise asset is called the M300 and it’s a set of smart glasses that incorporates Android technology to contribute to increased efficiency in certain workplace environments – warehouses, manufacturing plants, that sort of thing.

More recently, however, the company is increasingly targeting the consumer space. An in-house asset called the Blade just saw the launch of its developer kit pre-order program and, as per this announcement, the company is in bed with electronics giant Toshiba Corp (TOSBF) as part of a three year supply program that will see the latter market and sell a Vuzix-produced version of the M300 smart glasses device, co-branded as a Toshiba product, powered by Vuzix.

As a final update on the development side of things before jumping into the insider buys, the company also just announced a common stock and warrant financing, which will see it raise $12.5 million (and net around $11.5 million). The capital will be put to use to support the commercial launch of the above-mentioned Blade product and will bring Vuzix's pro forma cash and cash equivalents to $20.2 million as of September 30, 2017.

So, let's get to the focus of this discussion – who has been buying stock?

First, up, Edward William Kay. Kay is on the Board of Directors at Vuzix and, on November 15, 2017, picked up 10,000 shares of the company as part of this transaction. The shares were picked up at an aggregate purchase price of $5.95 (so, slightly above current open market price) and bring Kay's total holdings to 40,000.

Fast forward a few weeks, to December 14, 2017, and another insider buy hit the SEC. On that date, Timothy Harned, another member of the company's Board of Directors who was, this time, appointed back in June this year, picked up 2,500 shares as part of two transactions, both detailed here.

The first 2,000 shares were acquired for $6.03 a piece, while the remaining 500 came in at $5.94 per share – again, both of these prices are above the price at which Vuzix shares are available right now (December 21) at current open-market pricing. Harned's total holdings, post-transaction, come in at 22,500 shares.

Finally, on December 19, Paul Boris, Vuzix's COO and former Vice President of Manufacturing Industries at GE Digital, got in on the action and picked up 5,000 shares at $5.74 a piece. This transaction brings his total holding to 122,500 and is detailed as part of this SEC filing.

So what comes next?

There are a couple of near-term catalyst to keep an eye on heading into 2018, each of which could get this one moving. The first is the continued launch of the Blade device and, specifically, some strong demand for the above-mentioned developer kit. Any indication that developer interest is strong is, in turn, an indication that consumer demand for the technology will also be strong.

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The second indication of future strength is the smooth execution of the collaboration deal with Toshiba. Production under the supply agreement is expected to kick off during the first quarter of 2018, so that's a major milestone as far as realizing the revenues tied to the deal is concerned.

DISCLOSURE: Disclosure: the author holds no positions in any of the stocks mentioned in this piece.

The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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