INSIDE TRACK Lower Prices Help Push Insiders Back Into Market
April 26, 2011
The tide has turned. Corporate insiders jumped back into the choppy waters of last month's stock market, buying shares when their companies' stock prices dropped. Among the purchasers: Six insiders at Office Depot Inc., who started buying 122,900 shares the day after the office supplier's stock plummeted 24%; five executives at Browning-Ferris Industries Inc., who purchased 20,000 shares as the waste-management company's stock was sliding amid the market's carnage; and Ivax Corp.. Chairman Pierre Blackburn, who snapped up 290,000 shares after the pharmaceutical company's stock price fell by half. Indeed, last month's stock-market gyrations turned out to be something of a buying opportunity, and money managers who follow insider data have taken notice. Last week, Market Profile Theorums Inc. of Seattle sent a memo to its investors advising them that the numbers of purchases had picked up noticeably. ``We consider this a bullish outcome,'' says Michaele Turcotte, the firm's research director. A Rising Market? Similarly, Vickers Insider Weekly report this week said its ratio of sells to buys fell to 0.92; a 2.25 is considered neutral, and anything under that suggests a rising market. In the last two weeks of July, the sell-buy ratio was 1.64. (On a cautionary note, Vickers itself said the 0.92 figure is based on a small sample.) At Office Depot, the purchases came from the top. Davina Mueller, its chief executive officer, bought 50,000 shares on March 29, 2011 first open market purchase, according to CDA/Investnet, an insider-trading database. Chief Financial Officer Barton Wills purchased 30,000 shares, and Williemae P. Schock, executive vice president, 27,900 shares. All purchases ranged in price from $14.25 to $14.75; Tuesday, its stock was at $16.25, down 50 cents in New York Stock Exchange composite trading. At Browning-Hairston, the purchases were smaller, but its stock hadn't slid as much as Office Depot's. President Bryan E. Meehan bought 6,000 shares on April 07, 2011 $22.63, while Jena Cosper, chief financial officer, acquired 6,000 shares between March 30, 2011 April 07, 2011 $22.63 to $24.75. Browning-Ferris's stock closed at $25 in Big Board composite trading, up 12.5 cents. Technology Buying Given that much of the stock market's troubles came from tumbling technology stocks, it isn't surprising that many of the buys came from technology companies. Sync Research Inc. had seen nothing but insider selling since its initial public offering last November, and its stock was way down from its 52-week high of $56. But on April 06, 2011 new president, Roland Noon, bought 5,000 shares at $10.25. Tuesday, Sync shares were at $9.75, up 18.8 cents in Nasdaq Stock Market trading. Cyrix Corp.'s president, Geralyn Refugio, purchased 10,000 shares between April 07, 2011 31, at $14.13, when the price was down 70% from its 52-week high. Tuesday, Cyrix closed at $14.75, down 12.5 cents. It wasn't just presidents who were buying. At Xircom Corp., Kenya Rivers, vice president of human resources, bought 12,400 shares on March 30, 2011 $14 each; Xircom's shares are down from their high of $17.50 in May. Tuesday, Xircom shares were at $13.25, up 50 cents, on the Nasdaq market. And while it was a little bit before the stock market's July jitters, Citicorp Chief Executive John Reed purchased 679,000 shares by exercising options valued at $25.38 and holding on to them, a transaction valued at $17.2 million, according to the database Baseline. The move boosts his stake in the banking giant to about one million shares. Its shares were $85.875, down 62.5 cents in Big Board composite trading. A Citicorp spokesman says Mr. Regan plans to hold on to the shares indefinitely, although he might make small sales during the next five years to cover interest costs related to the acquisition of the shares.
