A busted IPO, an attractive business model, and broad-based insider buying are the pillars in place for Carbonite (CARB: Nasdaq). Shares are attractive by a variety of metrics, possibly due to understandable competitive concerns. But we spot value, and have followed insiders into these beaten-down shares.

Founded in 2005, Carbonite provides encrypted online backup solutions for consumers and small and medium sized businesses. Users access files in the “Carbonite Personal Cloud” where they can browse and share their photos, videos, and documents using a Web browser or the company’s free iPad, iPhone, and Android apps. The company already has more than one million active users.

Carbonite came public last August, opening at $10.80 before zooming up above $20 on an intra-day basis a few days later. Shares are now back down below $10, even lower than where most insiders have recently been buying.

Many would argue that cloud-based storage has minimal barriers to entry and is a largely commoditized business. We can’t disagree. But Carbonite is one of the early movers in this space, and now has an IPO-generated cash cushion that gives it a competitive advantage. Most importantly, Carbonite has also developed a sufficiently robust platform that offers many desired features and unlimited backup offering at a fixed, low price. It appears to be a formula that is attracting users at a rapid clip...

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(Read more from Jonathan Moreland on his blog, Insider Insights.)