Carl Icahn, a major owner of Xerox Holdings Corp (XRX), recently added 2,130,423 shares to his holdings. The buy increased his stake by 6.6 percent, and came to a total price of just over $36.3 million.
This marks the first insider transaction of the year. Over the past two years, company insiders have generally been sizeable buyers of shares on a regular basis, with only one insider sale in that timeframe.
Overall, company insiders, not including major owners like Icahn, own 6.5 percent of shares.
The IT technology and services company has seen shares slide 30 percent over the past year. Revenue has dropped 8 percent, and the company failed to make a profit in the most recent quarter, although it does trade at 14 times forward earnings.
Action to take: Investors may like shares here. Besides the low price to earnings, the company trades at 0.6 times book value and just under 0.5 times sales, making for a value play where even an improvement in growth or margins could lead to a sizeable rally. Plus, the company pays a 5.8 percent dividend at current prices.
For traders, a more activist approach by Icahn may lead to a bigger move higher in shares in the months ahead. The October $20 calls, last going for about $1.00, could see mid-to-high double-digit growth before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.