To me, the real issue is whether the pipeline of drugs, primarily erbitux, works. After bailing out, I just bought back in. My reasons are that the European trials seem to be going ahead nicely--they have not been discontinued, and the fact that insiders are buying back heavily. Waksul's personal finances, IMO, are irrelevent to the efficacy of the drug. Clearly there is a high risk of failure, but the my reading of the reward/risk factor lead me to reenter this morning.
ssociated Press
Insiders Snapping Up Co. Stocks
While Skittish Individual Investors Stay Away, Insiders Are Snapping Up
Shares in Their Firms
Tuesday September 3, 3:47 am ET
By THERESA AGOVINO, AP Business Writer
NEW YORK (AP) -- While skittish individual investors are largely keeping their wallets closed
amid the stubborn slump in stock prices, insiders at a broad range of companies have been
taking advantage of the market trough to snap up shares in their firms.
Executives from scandal-plagued
companies such as biotech ImClone
Systems Inc. and conglomerate Tyco
International Ltd. to downtrodden
technology firms like Sun Microsystems
have been picking up shares of late,
helping swing insider trades toward the
positive in August, according to Market
Profile Theorems.
Buying by insiders outnumbered sales
two to one in the week ended Aug. 23,
the most recent for which data was
available, according to the Seattle-based
firm, which tracks and analyzes insider
trading. That was a sharp swing from
June, when selling prevailed by 67
percent; insider trades were neutral in
July.
The shift to the upside is the first since early October 2001, said Michael Painchaud, research
director and principal of Market Profile.
"I think you can say this is bullish," he said. "There are lots of reasons insiders sell but only
one reason they buy: They think the stock is going up."
Analysts agree that insider buying is a positive sign but warn against making major decisions
based on that one trend. A decision to purchase a stock should include a variety of factors
such as the overall economy, the company's immediate prospects, the management team and
the competition, some analysts said.
"Insider buying is important but it isn't the be-all and end-all," said Brian G. Belski, fundamental
market strategist at US Bancorp Piper Jaffray. "Sometimes insiders are standing up to support
their stock and now is a fine time for insiders to support their stock."
More bluntly, Belski said, "Sometimes insiders are wrong."
Consider LSI Logic Corp. chairman and chief executive Wilfred Corrigan's decision to purchase
20,000 shares in the company he runs for $23.69 each in January 2001. What was nearly a
half-million dollar investment has shrunk by 70 percent and is now worth about $141,000.
Corrigan was unbowed. Last month, he bought 100,000 more shares for $7.67 each. Those
buys may still prove smart if LSI regains half the ground lost since January.
Corrigan didn't respond to a request for an interview.
LSI's dive is not an anomaly. Despite some recent strength in the market, the Dow Jones
industrial average is down about 14 percent this year, putting it on track for its third straight
losing year. Meanwhile, the Nasdaq is off about 33 percent for 2002 and down 74 percent from
its peak in March 2000.
A rash of corporate scandals have done their part to keep stocks in the doldrums, pushed there
by the struggling U.S. economy and disappointing corporate earnings.
Earlier this year, the economy was showing signs of a swift recovery, but is again languishing
and job growth has all but stagnated.
While such fundamentals have yet to improve, Painchaud contends his analysis indicates that
the market has bottomed and it is time to buy. He maintains insider buying is just as valid a
tool in choosing investments as more conventional methods, such as earnings and analyst
recommendations.
Painchaud points out that recent accounting scandals illuminate how financial statements
aren't always accurate while investigations into analysts' behavior show their recommendations
aren't necessarily objective.
"The insiders are taking money out of their own pocket and saying that at this level they find
their companies attractive. These are people that are knowledgeable about the companies and
the sector," Painchaud said.
Tracking insider moves should become easier because of new rules that went into effect last
week which require firms to report trades of company stock by officers, directors and
shareholders within two days. Previously, insiders had up to 40 days to report trades but the
revelation could be stretched out to more than a year.
The push for faster disclosure was spurred by investor outrage over millions of dollars cashed
out by corporate executives ahead of the burst of the market bubble and allegations of insider
trading.
Executives at biotech ImClone Systems Inc. are picking up shares, which have been severely
battered by a regulatory setback that is at the center of an insider selling scandal. Federal
prosecutors allege that the former CEO tipped off family members to dump their shares before
the news that the Food and Drug Administration refused to accept the company's application
for its promising cancer drug, Erbitux, became public.
Three ImClone senior executives and two directors have been picking up shares, which have
plummeted 88.5 percent to $8.65 after hitting a high of $75.45 last December before the FDA
rejection.
Board member David Kies, who in July bought 5,000 shares at about $7.03 each, said the SEC
investigation into the company's disclosure about the FDA action and the numerous lawsuits
ImClone faces are weighing down the stock. He thinks that will change when Erbitux is
approved.
"When all is said and done, I think the drug works," said Kies, who know directly holds roughly
293,000 shares.
fred |
