Vik Bros & XLA - you couldn't buy enough soap to wash away the scum.
From WSJ:
Xcelera.com Shares Surge, Then Drop
On Confusing Moves by Some Insiders
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
Investors at Xcelera.com Inc. can't be blamed for feeling confused these days.
Xcelera shares surged after the company announced a two million-share buyback program in mid-July, only to fall back sharply after the disclosure that corporate insiders had filed to sell one million shares just a week earlier. Insiders have now rescinded their intention to sell.
The episode underscores the importance of tracking insider activity against the public pronouncements of companies. "Insider sales around the time of an announced buyback go against the implied spirit of a buyback," says Bob Gabele, director of research at First Call/Thomson Financial, which tracks insider transactions.
See lists of the biggest individual insider trades of the past week and a rundown of companies with the largest net change in insider ownership.
In Xcelera's case, the insiders are at VBI Corp., which owns about 73% of Xcelera. VBI, or Vik Brothers International, is a family-controlled company run by brothers Alexander, Gustav and Erik Vik. Alexander Vik is also chairman and chief executive of Xcelera -- which invests in European Internet companies and is incorporated in the Cayman Islands -- in which he owns a 10.5% stake.
Xcelera says the insiders have acted properly, adding that VBI hasn't sold any shares in Xcelera since June. The Securities and Exchange Commission, which regulates insider transactions, says that the rules governing insider-trading forms and buybacks operate independently, as long as insiders don't have access to information that hasn't been publicly disclosed that could affect the sale of stock.
On July 17, Xcelera announced the buyback program, saying the stock was undervalued. Shares of Xcelera immediately soared more than 15% on the news, and traded that day at $28.75, up $3 in 4 p.m. composite trading on the American Stock Exchange.
A week earlier, company insiders filed to sell one million shares through VBI. When the planned sale was disclosed to investors, the stock sank. On Aug. 3, insiders amended their intent to sell, registering instead to sell zero shares. There are 106.1 million shares of Xcelera outstanding.
At that point, Xcelera scrambled to explain the turnabout. The company issued a statement saying "VBI filed the Form 144 simply to extend a previous filing." Alexander Vik, the chief executive, says insiders essentially "renewed a filing that had expired."
By filing a form 144 insiders have indicated that they intend to sell a number of shares within a three-month period, an SEC spokesman says. If they don't sell all those shares within that period, they must refile their intent to unload shares.
VBI filed a form 144 on April 10 indicating its intention to sell one million split-adjusted shares; it has since sold roughly 625,000 of those. The statement implies that insiders were merely preserving their right to sell a quantity of shares they indicated previously, says Robin Rodriguez, president of Anglo-American Investor Services Corp., a Charlottesville, Va., broker dealer.
But in reality, Mr. Rodriguez says: "It is a huge amount of additional selling."
Alexander Vik counters that there was "no intention of selling," and that insiders rescinded the intent "when we discovered it was out there."
So why were the forms filed in July at all? Alexander Vik says he's not sure, contending that his brother, Xcelera Secretary Gustav Vik, filed the forms. Gustav Vik didn't returns calls seeking comment.
Alexander Vik also notes that between the time the intent to sell was filed, on July 10, and when the sale was withdrawn, on Aug. 3, the stock had fallen from $30.313 to $12.313. "It was simply a case of the price being so low that we wanted to buy rather than sell," he says.
Now, some investors are crying foul. Friday, a suit was filed in a Connecticut federal court seeking class-action status on behalf of all purchasers of Xcelera's common stock. The complaint alleges that Xcelera and certain senior executives artificially inflated Xcelera's stock between April 1999 and July 2000 to "dump stock on the unsuspecting public."
Xcelera says the suit is "frivolous" and "without merit," and that it will "vigorously" fight the allegations.
Meanwhile, Alexander Vik notes that VBI still owns about 79 million shares of Xcelera, and says any shares "sold over time has been simply to diversify our portfolio." In the past week, VBI purchased approximately 100,000 shares of Xcelera, a company spokesman says.
Tuesday, Xcelera fell 62.5 cents to $12.313 in 4 p.m. composite trading. |
