A self-fulfilling prophesy.
Dragon -
- Klic won't tank without the rest of the industry tanking. Thus, on a 'big picture' level, the thrust of your sentiment implies that AMAT, TER, KLAC, LRCX etc. will tank as well. If not, you are implying something is specifically wrong with Klic. Could you please enlighten all of us at what this might be? There are more than a dozen analysts and Fidelity who appear to believe quite the opposite (see below).
-The insider sales are impressive...as they are for many other equipment companies. You listed the changes you found for stock holdings. Did you account for options still held by these insiders? If not, and since options likely represent the majority of their holdings, the % numbers you show are inappropriate.
-Over the last 90 days there has not been one analyst downgrade of Klic. In fact during this period there have been 11 analysts who have raised earning estimates and 0 who have lowered their estimates.
-Fidelity has made a major investment in Klic during this period as well.
Thus you are expressing what may be one of the most logical, albeit convoluted, explanations for Klic's retreat: insiders are selling, insiders know more than anyone, therefore something must be terribly wrong. Why are insiders selling? Most likely because they didn't bail out early enough in 1997 and they don't won't to be caught low and dry again. Do insiders see any fundamental, real world-based reason to sell? Probably not...but they don't want to be caught again regardless.
So last time most insiders were caught surprised with the rapidity of the downturn in 1997 and developed a significant distaste for these types of surprises. But the fact is they were unable to accurately predict the industry 1997. Insiders did NOT know better then.
So people are selling because insiders are selling but insiders have no proven track record. Blind leading the blind.
This post is certainly based on speculative hypothetical constructs. Your post was based on speculative hypothetical constructs. You presented all the insider data and none of the First Call or Fidelity data thereby painting the picture with a distinct skew. But more to the point, your entire argument is based on the premise that insiders are bailing for reasons associated with Klic's business, or the cycle, known only to them. If this premise is changed to a purely reactive mode where insiders are selling simply out of fear (rather than for reasons based on concerns about Klic or the industry), then your argument begins to crumble.
All we have to fear is fear itself.
Certainly analysts can be wrong. But 13 of them cover Klic and not one has lowered their earnings estimates in the last 3 months. This was confirmed 13 minutes ago. Thus we likely have lemming-like herd mentality of countless individual investors seeing the insider data and assuming something must be terribly wrong...and scrambling for the exits. How do I know this is the reason behind the selling? I don't. How do you know the insider trading of the last month is indicative of the end of the cycle or a problem specific to Klic?
Clearly you don't.
In my view, if the selling is to a large degree based on the insider data, then it's a self-fulfilling prophesy that will eventually be wrung out. And when this happens (Klic is now trading at an implied of PE = 13.2 for FY00 earnings and PE = 8.9 for FY01 earnings. 8.9!!!!!!!!!!!!!!!!), the action of the stock will be stunning... |
