Great article on Home Depot from WSJ
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Home Depot Insiders Sell Off Some Shares
By LAURA SAUNDERS EGODIGWE and JAMES R. HAGERTY
Staff Reporters of THE WALL STREET JOURNAL
Insiders at Home Depot Inc. have been selling shares of the do-it-yourself
home-improvement retailer as the stock has tumbled along with the overall
market.
From Aug. 19 to Sept. 16, six executives or directors of the Atlanta
company sold, or indicated they plan to sell, a total of 624,982 shares at
prices ranging from $40 to $45 a share, according to CDA/Investnet, a
Rockville, Md., company that tracks insider transactions.
Noting that the sales occurred after the stock
had reached its highs and moved into a
decline, Bob Gabele, president of
CDA/Investnet, said: "The action was atypical
to insider activity we had been observing in
most companies throughout the
August-September period, where the norm
had become for insiders to buy, or retain, their
shares through the market weakness."
Mr. Gabele added: "It seemed as if they weren't willing to wait around for
a significant rebound in the shares."
Home Depot has 1.5 billion shares outstanding, according to Baseline, a
New York financial-data company.
Leading the way among sellers was director Berry Cox, who sold
206,250 shares on Aug. 19 at $44.55 each. Mark Baker, president of
Home Depot's Midwest division, exercised options to buy 56,250 shares
at $17.58 each and sold the underlying shares at $45.50 apiece on Aug.
19.
Meanwhile, Bruce Berg, president of the company's Southeast division,
indicated he plans to sell 177,582 shares. Bill Hamlin, executive vice
president, merchandising, filed to sell 100,000 shares. Arthur Blank, chief
executive officer, filed to sell 81,000 shares and Annette Verschuren,
president of Home Depot Canada, indicated she plans to sell 3,900
shares.
A Home Depot spokesman dismissed the suggestion that Home Depot
executives are bearish on the company. Explaining the spate of such sales
in a short period, he noted that the company restricts sales to the first 30
days after the release of quarterly results. The latest quarterly results were
released Aug. 18. All the executives retain large holdings of Home Depot
stock, he added.
The spokesman said Mr. Blank sold 81,000 shares to fund a charitable
foundation, but still holds 22.4 million shares. Mr. Berg's sale of shares
was related to a divorce settlement, the spokesman added. And, he said,
Mr. Cox's sale was aimed at "portfolio diversification." Mr. Cox still owns
about 2.8 million shares. The spokesman said Messrs. Hamlin and Baker,
and Ms. Verschuren all sold shares after exercising options, but they still
own large stakes.
Until recently, Home Depot stock was soaring. By far the nation's biggest
home-improvement retailer, the company has reported record earnings for
each of the past 50 quarters. Adjusted for a 2-for-1 split in July, the stock
hit a high of $49 in mid-July, up from around $23 a year earlier. At that
peak price, the stock was trading at about 47 times projected earnings for
the current year. Since then, it has dropped about 25%, closing Tuesday
at $36.875, up $1.75, or 5%, in composite trading on the New York
Stock Exchange.
One reason the stock had fallen so fast in recent days is that "the valuation
was pretty rich," said Mark Mandel, an analyst at ABN Amro. Worries
about the economy have been growing, he said, and a downturn would
hurt Home Depot sales as homeowners delayed expensive remodeling
projects.
Kim Shreckengost, vice president, investor relations at Home Depot, said
the company has shown an ability to cruise through down cycles in the
economy. The fiscal third quarter, which ends Nov. 1, "is shaping up just
fine," Ms. Shreckengost said. "We're not seeing any change in consumer
buying patterns." She added that the long-term outlook is good. "This
company is probably more solidly based and prepared for the future than
it has ever been." |
