<<At worst, I suspect (though this is just an opinion, and I have no proof) that we are dealing with a bunch of rogues who are determined to enrich themselves at the cost of the shareholders, and enrich themselves as fast as possible. They'll rape this stock for everything its got, and then rape some more - ruthlessly, like there is no tomorrow>>
To which you wrote:
<<how do you suppose they plan on enrinching themselves at the cost of shareholders?>>
What I simply meant was the following: the insiders own shares at no or minimal cost. That is like FREE MONEY to them. Therefore, it doesn't bother them that the price is "low" - they want to take out money, so they sell regardless of how that impacts the common shareholder who had to shell out hard-earned money for it. I call that the "rape" of the common shareholder. How will they enrich themselves at the cost of the common shareholder? Well, if they believe that, say, for whatever reason, the p/e of this stock will compress (as has been happening), and that the realistic price is 23-35 (the collar) for early Y2K, and perhaps it is dead or deadish money going forward, why shouldn't they sell now, at higher prices? Lovable Kenny P managed to sell, almost always at a higher price - why should he wait for the price to decline? After all, as he says, prices tend to "overshoot to the upside and downside" - so, he established a collar of $23-$35 for early Y2K (where he clearly thought it was realistic)... now, in Nov, the price "overshot to the upside" and hit $45+... why NOT sell at 45, which he did, since 3 months later it would hit 29+. They have no cost basis in the shares, and just waiting makes no sense, since this is dead or declining money. So why not sell as much as possible, as early as possible - because the future appreciation of this stock is not certain (in part thanks to their selling, LOL!). That way, they can "diversify" into other stocks, which actually, amazingly, go UP.
If you had access to **free** NITE shares, and they were trading at $50, $40, (not to mention $60 or $80), would you sit on those shares, or would you sell them as fast as you possibly could, so that you can invest in a real stock?
Let us see... you believe NITE shares are doomed to go lower (and Kenny already told us that early in 99, they "overshot to the upside") - the longer you sit on them, the less free money you can pull out, and the less you can put in stocks that are anti-NITE (i.e. stocks that actually manage to go up more than once every 25 trading days).
So, you sell as fast as your fat little legs carry you to the nearest keyboard, or phone so you can yell: SEEEEEEELLLLL!!!!!
Now, unfortunately, insiders couldn't sell until the lockup expiration allowed them to (though one institutional insider found a way to skirt the rules: they transferred their shares in a private placement BEFORE the lockup ended to another institution, and now that institution sold them since they were not insiders; this was not against the letter of the law, but certainly against the spirit - which is why media have called the ethics of some insider selling in NITE into question... just one of the nice little happenings behind the scenes, as insiders "take care" of shareholder value).
Not to worry, the second it became possible, insiders sold, and sold, and sold, and sold - they cannot sell fast enough, they are so anxious that they get in each others way as they get stuck in the door on the way out.
And who can blame them? Kenny already knew that the price is most likely going to be $23-35 in early Y2K, so when he sold in NOV at 45, it was a "good trade" (no wonder he trades stocks for his own benefit on the job - he's good at it). Would you like to sit on a loser for months, or would you rather "diversify" into winning stocks?
Of course, somebody bought those shares from Kenny; to Kenny, these were free shares so he sold "without regard to price" (he's lucky, you see, pure luck). To the person buying Kenny's shares at $45, it is not free money - maybe they worked hard for a long time, and with the hard-earned money, they wanted to establish a college fund for their kids. So, they bought Kenny's $45 shares, while Kenny was planning on a $23-$35 collar. Go to the various message boards. Read how many people got margin calls. Read how many sold after taking unbearable direct losses, and more opportunity losses. Read how they howled in pain, while Kenny disdained PR, and "was above it all". See, for some these are life savings. But Kenny is worth hundreds of millions of dollars, and he is hungry - so why shouldn't some working stiff fork over their petty life savings for Kenny's $45 shares? Not to worry, a collar is coming.
I remember the secret cancellation of the share buyback program last summer. See, if they announced it, the shares might take an immediate hit, as Working Stiff Joe wouldn't be buying the shares insiders and favored institutions unloaded. That means less money for Kenny. Because Kenny sold 300K worth of shares for $44.91 on Aug 2. The very next day, the price dropped to $37, and things went on their glorious way to $22. Once I discovered the secret cancellation, I denounced management in the strongest terms. But since, I have come around. I realized that Kenny was just being a good trader... because after that $44.91 sell, the price never again hit $45 until Nov, when Kenny sold for $45.31 - that was another good trade. Of course, that was "regardless of price" - just luck see, pure luck.
In fact, I don't know why I call such behavior by the insiders, the "rape of the common shareholder". I should have called it "making love to the common shareholder". Yep, it's just a different style - I should open up my mind to love the NITE style - bend over, grab your ankles, and wait for the NITE train to come through with Kenny at the wheel.
Excuse me while I go puke.
I'll address your other points later.
ALL OF THE ABOVE IN MY OPINION ONLY.
Morgan |
