Arnie, as you posted on YAHOO with a concern about insider selling during March, I thought I would cross-post my response here:
>>Arnie, to the 7 VPs that sold some shares, and the one Director and "affiliated person" who have filed to sell some shares, I say: "Job well done!" As FM is now solidly on track again, I can't blame them for wanting to liquidate some of their FM holdings and receive some well-deserved cash to upgrade their homes or autos, or whatever. These are not large percentages of management's shares. I bet the VPs that sold for an average of $18.53 are kicking themselves today.
Since all Directors and Executive Officers as a group still own about 4 million shares, I'm not worried that this is any vote of lack of faith on their part. I know that Hal Sachs was disappointed that FM hadn't popped immediately to $20 in the aftermath of the lawsuit settlement. He said they were really perplexed. Perhaps they figured that FM wasn't going much higher anytime soon and decided the news couldn't get any better, so they might as well sell. I'm sure they announced the write off of non-performing assets then for the same reason, to take advantage of all the good news in blunting this negative announcement.
I don't know a lot about how stock options work, but might this selling be related to options? According to the 2/14/98 Proxy statement, some of these VPs had up to 150,000 shares of exercisable options with a base price of $7.12--pretty tempting to sell off some of them now while leaving plenty left over, if I read this right.
Arnie, I was looking over my notes from my last analysis and I saw that back in February I had posted FM should have a fair value of $20.50 using the industry mean p/e of 19.16 on 1998 earnings estimates. It's nice to be right some of the time!
I also posted that FM should be $21.40 using YPEG valuation and its 20% 5yr gorwth rate; $27.61 using PEG. That was before the settlement and debt paydown/restructuring. I think these numbers weren't overly optimistic, and perhaps show that FM still has significant upside potential by this fall.
D. Kuspa<<
I still hold a smaller core position in this stock, but have taken profits many times along the way and have moved back in to my advantage when FM was grossly undervalued (last January's $15 trading range was a slam dunk). Even though we've seen the lion's share of appreciation during the past 3 years as FM recovered, I still find reasons to hold onto this stock. FM went through its all time high today intraday but settled back to close lower. |
