Cogent Communications Insider Sales: A Contrarian Signal in a Digital Infrastructure Play?

In the volatile world of telecommunications, insider sales often strike fear into investors. Yet, when those sales come from a CEO who has spent 26 years building a global communications powerhouse, the calculus grows more complex. Cogent Communications (CCOI) CEO Dave Schaeffer’s recent $4.7 million in stock sales in May 2025 have sparked debate. Is this a red flag, or a rare buying opportunity in a company with $956 million in annual revenue and a fortress-like global network? Let’s dissect the data.

The Numbers: Ownership, Sales, and Resilience

Schaeffer’s May transactions—selling 94,000 shares—represent just 2.2% of his total holdings, which remain at 4.27 million shares (8.97% of CCOI’s 47.5 million outstanding shares). Even after these sales, he retains a stake worth over $216 million, underscoring his alignment with long-term shareholder value.

Crucially, these sales do not reflect a sudden loss of confidence. Schaeffer’s career has been synonymous with Cogent’s rise: he founded the company in 1996, and under his leadership, it has grown into a $956 million revenue juggernaut with 40+ data centers and 50,000+ route miles of fiber globally.

Why the Sales? Context Matters

Insider selling can signal many things—none of which are inherently negative. Schaeffer’s actions likely reflect personal financial planning or tax optimization, a common strategy for executives with concentrated equity stakes.

Consider the broader trends:
- No insider buying since 2020, but Schaeffer’s sales represent just 21% of total insider sales in the past 18 months.
- No reduction in Cogent’s core metrics: Revenue grew 8% YoY in 2024, and its global network dominance (spanning 60+ cities) remains unmatched.

The Contrarian Case: Buying When Others Flee

The market’s knee-jerk reaction to insider sales ignores Cogent’s structural advantages:
1. Defensible Moat: Its fiber network and data centers form a critical backbone for cloud and enterprise clients.
2. Profitability: Gross margins remain above 55%, and EBITDA growth has outpaced revenue for five consecutive years.
3. CEO Tenure: Schaeffer’s 26-year track record includes navigating the dot-com crash, the 2008 crisis, and the pandemic—each time emerging stronger.

Critically, Schaeffer’s continued ownership and the lack of executive exodus signal confidence in Cogent’s $12 billion market opportunity in hybrid cloud infrastructure.

Final Analysis: A Buy Signal for Patient Investors

While short-term traders may panic over insider sales, the data tells a different story:
- Schaeffer’s reduced holdings remain a significant equity stake, not a full exit.
- Cogent’s fundamentals—revenue growth, geographic diversification, and network scale—remain unshaken.
- The stock’s current valuation (trading at 7.2x forward EBITDA) lags behind peers despite superior margins.

This is a classic contrarian moment. When a founder with a multi-decade track record trims a small portion of his holdings, it’s not a death knell—it’s an invitation to buy a $956 million revenue company at a discount, backed by infrastructure that’s become the backbone of the digital economy.

Investment thesis: Aggressive insider selling in the face of strong fundamentals often creates buying opportunities. CCOI’s network dominance, CEO credibility, and undervalued stock make it a compelling contrarian pick for investors with a 3–5 year horizon. Act now while the market hesitates.