Correlation: Insider Sales & Future -- Case of ICN Pharmaceuticals
Here is an example of how many times there may not be any correlation between insider selling and future price of shares.
ICN has a blockbuster drug which Schering-Plough will market for a co-therapy for Hept. Potential for the drug to bring $5/share in EPS in next few years for ICN's part. ICN itself is investing around the world. What do insiders do? They sold, sold and sold. ICN closed yesterday at 49 and change.
Reported Name # sold $$$ Sell price Market price
20-Jun-97 A. CHARLES 2,861 x x 22
03-Sep-97 H. LIGHTSTONE 3,796 129,538 34 36
03-Sep-97 J. SHOLL 12,675 432,534 34 36
03-Sep-97 J. GIORDANI 9,829 335,414 34 36
03-Sep-97 B. LAP 1,742 59,445 34 36
02-Oct-97 N. BARKER 5,996 217,355 36 38
02-Oct-97 R. SMITHA 32,835 1,190,268 36 38
02-Oct-97 B. MACDONALD 4,122 149,422 36 38
02-Oct-97 B. MACDONALD 4,122 149,422 36 38
02-Oct-97 B. MACDONALD 133,000 4,821,250 36 38
09-Oct-97 A. CHARLES 11,996 608,797 51 53
10-Oct-97 S. MOSES 5,439 197,163 36 54
14-Oct-97 D. WATT 30,000 1,087,500 36 52
Total 258,413 9,405,341
Sept. 22 /PRNewswire/ -- Schering-Plough Corporation (NYSE:SGP) today announced results from two pivotal Phase III clinical studies showing that INTRON(R) A (interferon alfa-2b) plus oral ribavirin combination therapy versus INTRON A alone resulted in a 10-fold increase in the number of patients showing eradication of detectable (HCV-RNA (qPCR)- negative)* hepatitis C virus in patients who had relapsed after prior alpha interferon treatment. SGP has exclusive rights to market oral ribavirin for hepatitis C in all major world markets through a licensing agreement with ICN Pharmaceuticals, Inc.
Note that insiders selling just before the announcement. Except one, all the insiders sold at about 35. Vickers show that many sold every share. Anybody want to comment?
My read on it:
[1] as steve puts it: " in a large majority of cases...insiders make the stupidest mistakes with their stk options... In fact their decisions with stk are so bad it makes you question "why you own stk in their compnay" or
[2] option excercise so they get whatever few dollars over the excercise price or open window coinciding with low price but they have activities coming for which they need money (x-mas, house closing, kid's private tuition, etc)
BTW, all I can say about my 2 years of investments (long and trades) in ICN is (:-))))))) Actually, knowing SGP presentation, made two quick trades betn 36 to 55 (Aug-Sep) and 42 to 52 (oct -last week). Still holding the long position.
Bad things (coincidences which drive stock prices really low) happen to good stocks. Important is to be objective and not panic because somebody has spoken!
Should Moe and Curly buy shares in open market when they already own or have options to buy almost 10% stake ? That will be a sign of these guys maturing as billion $ businessmen from a tech shopee owner. But I wouldn't get too hung up on it. I know enough of these guys to say that they don't appreciate these small gestures, though they may work upto 11 pm every night to design and execute great strategies.
BTW, steve good to see you back on this board. Will appreciate to know what is ur current thinking on ASND and NN. A friend in LU (b. manager related to ATM) had mentioned last year that these two may be the takeover targets for anyone who want to lead the ISPs and carrier market. he thinks the next big thing is voice over IP, where FR with ATM is the clear winner. hummmm.. let me think: who has gone through the pain of repositioning themselves for this over last year..ooops, not NN.
also, does some one knows how to put a table format on SI? (i will admit i am lazy when it comes to going back to books)
satish kamat
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