Digital River's shares immediately gave up 37% of their value on the news and subsequently drifted down from $26 to $22 ahead of the company's earnings release on Nov. 3. Tellingly, DRIV found a bid in the wake of the firm's decent third-quarter results. And into the momentum, CEO Joel Ronning purchased over $5 million worth of his firm's shares at an average cost of $25.80.

A Change of Heart

I would much rather have seen more buyers of DRIV during its turbulent ride, but many insiders appear to be restricted from doing so, because they sold shares, wisely, as late as June. Short-swing trading restrictions promulgated by the Securities Exchange Act of 1934 forbid them buying until six months after their latest sale.

In any case, I use insider data to narrow down my choices of where I focus my subsequent fundamental analysis, and Ronning's transaction was bullish enough to meet my threshold of insider trading significance. He increased his holdings by a sturdy 35.5% with his purchase. It was also a large dollar value for Ronning. Furthermore, his buying was a reversal from the selling he had done of his firm's shares back in 2007.

The bottom line for Digital River is that losing a customer responsible for 24% of its revenue didn't justify losing as much as 46% of the firm's market cap. Even after rebounding, the company's stock is still 34% below its pre-Symantec bombshell.

This simple point of being oversold despite the Symantec news was made more obvious by Digital River's decent third-quarter results. The firm beat revenue expectations by $1 million and earnings per share by one penny. More importantly, management said that "revenue, excluding Symantec, was expected to grow 16% to 18% year-over-year" in its upcoming quarter, and through 2010.

After the company's third-quarter conference call, analyst Carter Mallow at Stephens wrote: "we believe Digital River's core business is well positioned to benefit in 2010 from a secular shift toward online purchasing and look for any uptick in consumer spending to be incremental to sales."

Regarding Symantec's cancellation, Daniel Ives at FBR Capital Markets specifically noted that "we continue to believe this is a Symantec-specific issue and should not be construed as a negative trend for the rest of Digital River's customers." He further offered that he expects the company "will ultimately emerge from this situation a healthy company with good diversified growth prospects."

Despite these positive longer-term sentiments, however, neither analyst rates Digital River's shares a buy right now. "Equal weight" and "market perform" are their calls, based on the uncertainty Symantec's departure is creating. This middling opinion is also shared by most analysts.

Worth a Long-Term Look

Fair enough. But I believe these analysts' comments are better used as indications of who should find Digital River's shares attractive enough to buy right now, rather than as a conclusion that the stock should be completely ignored. Growth and momentum players need not apply, but longer-term value investors (which is how insiders are typically labeled) and special-situations players should take a look.

Between cost cuts forced by losing Symantec, and growth initiatives that include geographical expansion, the company's targeting of new vertical markets, and its new offerings from what management termed in its recent conference call as Digital River's "vast pipeline of really cool new products," I believe that hanging a long-term bet on the company's shares at this historically depressed level is a valid move.

For investors who are still worried about the top-down health of the market, Digital River's $10.80 per share in cash and solid cash flow give more support to its already beaten-down shares than what is found among many expensive, momentum-driven tech stocks that are constantly touted as "must-own" positions.