Buying by Directors Isn't a Sure Indicator
By CASSELL BRYAN-LOW
Staff Reporter of THE WALL STREET JOURNAL
On its face, it would seem a pretty positive indicator that a stock might rise: the purchase of stock by a corporate insider who not only is a company director, but who also is an investment professional.
The person doing the buying, in other words, not only is intimately familiar with the company, but also knows enough about the stock market to know a good investment from a bad one.
But is it really that simple?
"In some cases you should" piggyback on such insider buying and think of buying some shares, too, says Martin Whitman, a well-known money manager who also serves on the boards of several companies. But, he says, "I don't think you can make a general rule."
Lon Gerber, director of research at Thomson Financial/Lancer Analytics, which tracks insider transactions, is more emphatic. "The fact that [insiders] have experience in the finance industry isn't necessarily an indication that they know when it is best to invest in a particular stock," he says. Historically, "we haven't found that their trades have been more predictive at all" compared with other insider activity......
...Retired portfolio manager John Neff, formerly of Vanguard Windsor fund and Wellington Management, in December bought 20,000 shares of Amkor Technology Inc., a West Chester, Pa., provider of contract semiconductor packaging where he is a director, at $15.03 apiece, compared with the 52-week low of $11.75 set in December. The purchases appear particularly well timed in light of the stock's current price -- $22.88 at 4 p.m. on the Nasdaq Stock Market, up $1.13. He also cashed in $1.8 million, or 40,000 Amkor shares, during the first half of last year at prices ranging between $43.32 and $51.39, according to Thomson Financial. snip.....
Jim |
