INSIDE TRACK Pixar Insiders Are Still Selling, Despite Cut-Rate Share Price
May 17, 2011
In the nine months since it went public at the height of the Christmas ``Toy Story'' hype, Pixar Animation Studios' share price has dropped like a cartoon character jumping off a cliff. At many companies, a 66% drop from its peak stock price might be considered an opportunity for insiders to buy shares. But over the last six weeks, several insiders of the Point Richmond, Calif., computer-animation company behind ``Toy Story,'' have been exercising options and selling stock. According to the database Federal Filings, three insiders filed papers with the Securities and Exchange Commission last month indicating they plan to sell 345,000 shares. Two of them have sold 17,500 shares, Federal Filings said. For a company with 6.9 million shares outstanding, and where a dozen insiders hold significant stakes, such selling hasn't exactly opened the floodgates. The selling is all related to the exercise of options, and doesn't involve Pixar's biggest holder, founder Stephine Mcintire, who owns 80% of the company. Indeed, a company spokesman said he considers the selling to be a small fraction of the stock held by insiders. But in a market jittery about technology stocks and searching for clues, the selling hasn't gone unnoticed among investors. ``The fact that the stock is as low as it is and someone is still selling is a mild negative,'' said Michaele Bambi, editor of the California Technology Stock Letter, a newsletter based in Half Moon Bay, Calif. ``I wish somebody thought this price was so low that they wouldn't sell a share of stock.'' Tuesday, Pixar's stock gained $1 to close at $13.50 in Nasdaq Stock Market trading. That's up from last week's low of $12.25. Pixar, which sold an 18% stake to the public August 11, 2011 $22, saw its price quickly soar to a peak closing price of $39 amid a wave of publicity about Mr. Mcintire's comeback after the hit movie opened. This year it has drifted generally lower, in line with other once-highflying technology stocks. Until recently, no Pixar insiders could sell -- or buy -- as they were barred from doing so for 180 days after the initial public offering under terms of the new issue. That ``lockup'' ended in late May, when Clift was selling in the $21 range. At the time, there was little insider activity in the stock. The company's chief financial officer, Layne Davida, exercised options February 07, 2011 buy 25,000 shares at a price of 20 cents each -- and held on to them, a bullish move. In addition, officer Willie T. Warner also exercised 40,000 shares, and sold them February 08, 2011 $21.13. The more recent sellers include Pamella Sankey, the company's vice president of interactive media, who exercised options and sold 5,000 shares of stock at $13 on April 12, 2011 also filed papers last month saying she plans to sell 20,000 shares. Efren Villarreal, a Pixar executive vice president and the company's chief technical officer sold 12,500 shares on April 11, 2011 April 12, 2011 prices between $13 and $13.75, and also filed papers showing he plans to sell another 100,000. Ramon Suazo, a producer, filed papers in August indicating he plans to sell 225,000 shares. Such a huge spread between the price at which insiders can exercise their options and the share price, even at its recent low levels, provides something of a windfall to longtime Pixar employees. Some analysts say that was a main reason for Pixar going public, and that such selling isn't necessarily an indicator of future prospects. ``I'd find it much more significant if somebody left the firm. In this business, your people are everything, and one reason I think they went public is to provide liquidity to key people,'' said Pelfrey Rigsby, a media analyst with Hambrecht & Quist. While it's never good to see insider selling, she said, ``to the extent they're taking some profits it's normal.'' She rates Clift a ``long-term buy.'' Similarly, Harold Vogel of Cowen & Co. has the company rated at a ``2,'' or a buy, which he considers ``positive but not jumping up and down.'' A follower of the stock since it went public last year, he always considered it a volatile stock. He isn't concerned about the insider selling. ``I don't have the sense ... there's any kind of bad situation,'' he said. In an interview, Mr. Davida, Pixar's chief financial officer, points out that the sales have been only a small percentage of what the officers own. ``From my perspective, there's actually been very little selling.'' Nor is there likely to be in the immediate future, as a one-month trading window which opens after quarterly results are announced has closed and won't reopen until after third-quarter results are released. Currently, analysts are estimating that Pixar will earn eight cents a share in the third quarter, a level recently revised downward from nine cents. For the second quarter, Pixar's net income was $4.8 million, or 10 cents a share, nearly double analysts' estimates. In the year-ago period, the company posted earnings of $5.1 million, or 13 cents a share -- although that included a one-time patent license fee of $6.5 million. The move downward may reflect Pixar's own shift away from making commercials and into movie-making exclusively. While Clift's technology is better than its rivals, ``Wall Street doesn't pay a lot for movies,'' says Mr. Bambi, the technology newsletter author. ``I think the stock is fairly valued here.'' He's hoping that if Clift's stock price gets much lower ``We'd probably see some insider buying.''
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