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Technology Stocks : Glenayre Technologies(GEMS)- a pure cellular PCS play?
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To: Linda Kaplan who wrote (1360)7/10/1997 1:19:00 PM
From: Jeffrey L. Henken   of 3431
 
I posted the insider purchases on the PRMS thread as soon as they showed up as a public record at the insider trader site. Look back through the thread if an actual date is needed.

I'm a very good tennis player. When I first learned how to play Bjorn Borg and topspin were all the rage. I though that any other method of hitting the ball was wrong or at least less likely to succeed. I still do to a certain extent. However investing like tennis can be successful with different methods. I just think that there are ways to decrease risk and increase rewards. So here are some general rules which I employ for buying:

1.) Be a contrarian. Buy when everyone else seems to hate the stock.

2.) Look for value. A low PE. High book value. Lots of cash.

3.) Buy stocks that you are familiar with whenever possible instead of the latest hot issue.

4.) Let insider activity help make your buy decisions. Even more than the rules above insider purchases increase the likelihood that you will have a winning stock. As with all the rules above it also decreases any potential downside.

5.) When considering insider purchases as a buy signal look for large buys by several insiders at a given company before giving the buying much creedence. If there are several stocks you like that are being bought by insiders use fundamental analysis to determine which is the best(least risky) buy.

6.) Try to buy a stock as close to the level that insiders have purchased as possible. Remembering that insiders are often 6 months early before a stock will really take off.

Things to avoid:

1.) Momemtum investing. too risky

2.) Avoid investments in penny stocks or companies you know next to nothing about. Stick with those out of favor issues that Wall Street is beating up. Like they did to the networkers recently.

Other rules that I use to help in buy and sell decisions. Buy on the rumor if you know one. Sell on the news! Use TA as a tool for finding an entry point and look at a stocks previous highs for a potential exit. Also look at previous high PE's for exit points. Look at insider selling as an indication that a stock is fully valued. Set a level in on paper that you would like to sell your shares at and then do it. There are always going to be other beaten down stocks that you will find insiders investing in that will be on sale on the bargain rack.
I know I have left out a lot and may not be entirely clear especially about selling. That's because I like to let my winners run. But that being said I will sell as soon as it looks like the tide has turned. Finally as I have said before periodically you should clear out your portfolio of those issues that have underperformed. Use that money to buy other undervalued companies where insiders are buying. Good Luck, hope this helps. Regards, Jeff
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