I disagree with those who think that something bad is about
to happen to NITE. There are rather obvious clues as to
why. Here's why...
As I posted earlier, from my discussions with the company,
Ken Pasternak DID sell his 300K shares on or shortly after
the day he filed his SEC Form 144 intention to sell.
I believe this sale by THE most prominent insider is a
blessing in disguise because it is a signal that there IS
NO OTHER SHOE THAT'S GOING TO DROP.
Q: Why do I think this effectively disproves some imminent
bad news some people (including Morgan) seem to be worried
about?
A: With the proliferation of shareholder lawsuits against
insiders who have "dumped" in advance of bad news, we can
be sure Ken Pasternak IS NOT GOING TO RISK HAVING HIS
COMPANY ASSAULTED BY THE ATTORNEYS!
He's too smart to subject his company and his shareholders
to the incessant "class action" spamming on the newswires.
Sure people can joke that he doesn't care about his
shareholders, but that's b.s. He does care about the
company's market capitalization, which, implicitly or
explicitly means, he IS concerned about shareholder value.
In the course of investing for the past 18 years, I've
spoken with numerous IR people, plus CFO's and CEO's. One
CFO commented once to me that there are numerous hurdles to
cross if an insider wants to cash in some shares:
-inability to sell during lockup periods
-inability to sell during quiet periods before earnings
-inability to sell several hours/days after earnings
-inability to sell during quiet periods before special announcements
-inability to sell during quiet periods before acquisitions, etc.
In other words, being an insider means having to navigate a
minefield in order to "safely" sell your shares with being
a victim of litigation.
Therefore, in a convoluted sense, the only "safe" time for
an insider to sell their own stock is WHEN IT IS ABOUT TO
GO UP! Such irony, but it's true!
And, as a matter of fact, history has borne out this theory
with NITE. To verify, take a look at all the insider sales
that did occur on 3-March-1999 when NITE was $33.50/share.
3-Mar-99 RAQUET WALTER Sold (S) 450,000 CL A 33.50 $15,075,000
3-Mar-99 STEINMAN STEVEN L Sold (S) 450,000 CL A 33.50 $15,075,000
3-Mar-99 LAZAROWITZ ROBERT M Sold (S) 450,000 CL A 33.50 $15,075,000
3-Mar-99 SANFILIPPO ANTHONY M Sold (S) 50,000 CL A 33.50 $1,675,000
3-Mar-99 WATERHOUSE INVESTOR SERVICES INC. Sold (S) 900,000 CL B 33.50 $30,150,000
3-Mar-99 PASTERNAK KENNETH Sold (S) 450,000 CL A 33.50 $15,075,000
At the time one would have thought the sky is falling? Right?
Wrong.
Within two months after these sales, NITE more than doubled
over $80/share. Either these insiders were terrible at
buying and selling stocks (oh, but isn't that their
business anyway???). Or, they simply sold during a "safe
harbor" period.
I suspect the latter, so the March 3rd example provides
historical evidence that insider sales do not typically
precede bad news. Enough said. |
