Friday, August 22, 2008

Insiders Listen and Buy

When the elephant talks…who listens? - apparently, management and the directors.

Insiders anted in another $3.0 million to the coffers of Elephant Talk Communications, Inc. (ETAK: OTC/BB), a multimedia content distributor and telecom operator. The Company had just raised an additional $3.3 million in a private placement. Insiders now own about 30% of the Company.

Elephant Talk partners with mobile network operators as a systems integrator and content distributor. It operates a network in the U.S. and has interconnects with telecoms in Europe and the Middle East. It is a capital intensive game to play and insiders are pitching in to make certain the build out happens sooner rather than later.

Sales have been fairly steady in the six quarters since the Company started doing business, but expenses still outstrip revenue. With a negative net margin negative of 20.5% on $47.4 million in annual sales, most investors would look right past ETAK - even with its catchy company name.

However, when an insider writes out a check, it catches investor attention. Network expansion and content distribution are two areas of growth in the communications industry that is otherwise a “dead zone” for investors.

So far investors have had a tin ear for the elephant. ETAK shares are off 56% from the stock’s 52-week high.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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