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Strategies & Market Trends : The Market Taught Me That......
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To: Cynic 2005 who wrote ()11/7/1997 3:19:00 PM
From: MENSO  Read Replies (2) of 151
 
Great idea for a thread, Mohan. Thanks !

My own $0.02 FWIW is to always pay close attention to what insiders are doing. When the 144's start to pile-up it is time to bail-out.

On the other hand, if you see gradual accumulation taking place over a period of months at increasingly higher share prices, then the company is probably worth at least a second look.

For example, RomTech's Chief Financial Officer bought another 25,000 shares at $2 last Thursday. He now owns a total of 75,000.

The company recently reported its first profitable quarter after breaking even the previous quarter. And recently the company issued a press release stating they expect EPS of $0.20 for Fiscal 1998 (which already started for this company). At a forward-looking P/E ratio of 30-40 (average for software companies) the stock could soon be worth in the neighborhood of $6 but is still trading at only $2.

Insider buying can be very telling in this type of scenario. Surely the CFO would have to believe its own press release to be accumulating the stock at $2.

But this is a thinly-traded stock and under $5 so I know you probably won't like it, Mohan. I am only using it as an example of a situation of where watching insider activity helps.

Good luck to all and keep up the good work on this thread. I have bookmarked it already. Thanks again.
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