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Technology Stocks : LSI Corporation

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To: E. Graphs who wrote (9950)	2/20/1998 8:21:00 PM
From: shane forbes	Read Replies (1) of 25814

E When I'm out of ideas I sometimes use insider buying to put a stock on to a watch list for further "study" (and I use the term lightly - since I've got quite lazy these days). If there is a good story and the buying is significant I don't think you can lose by buying when the insiders are buying. The catch is that sometimes it's too late as the stock may have shot up 30-40% by the time I have noted the insider buying. In which case I just pass and move on. But often and especially when the market is behaving badly you can find some really good stocks that see a lot of insider buying with no price appreciation in the shares. Nov and Dec were great for that! Another good normal market example sometimes presents itself during turnarounds (which as you know can take several quarters). If all of a sudden you see insider buying, jump on board - the turnaround's complete. ---- In turnarounds if all of a sudden you see selling forget it - dump and dump quickly. With stable growth companies I could care less about insider selling unless it is really excessive. With cyclical companies insider selling in the industry is a real clue of an cyclical top. That CDA guy is right. It's the trend that's important not nec. an isolated purchase or sale. (darn - trend - that's almost chartist like.) [BTW for the semi-equips the equivalent seems to be a massive string of equity fund raising. Such as early fall of last year.] ---- But overall, under normal circumstances, buying to me is much more significant. Also under normal circumstances I would look at other factors first and then insider buying. But with the market so high the last little while it's been really tough (and I have really tried) finding things that look fundamentally cheap and yet could go up in the short term! So the screens are beneficial today. ---- Finally and perhaps most important I use the prices that the insiders have bought as a guage as to what the fair price of the stock should be and what they should be for similar companies in the industry. That's a neat trick if you know what you're doing. [All these ratios as P/S, P/E, P/CF mean different things in different industries. Darned if I know what to emphasize for each industry. The insider buying helps here.] For instance Corrigan's buy at 23-24 was nice. It likely suggests that this is a reasonable price and that business must be picking up. [Ideally we would have seen a lot more players come in and buy LSI stock. But not so lucky this time! Usually the more the better - the CEO buys though important are not as valuable as buys from the buys made by the lower-rung guys. The reasoning is that if you are "poor" (and I use the term frivolously here!) and you are an insider buying here and lots of "poor" people are doing the same and you can get in at a comparable price you're likely golden!] ---- Talking about Y2000: techweb.com And more relevant to chip investors: techweb.com

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