Lev didn't sell shares in March.
You wrote:As for insiders, it is quite positive that insiders have been buying (particularly the big $450,000 by Shugart). But Lev's buying is unimpressive since he disposed of about 850,000 shares in Marsh and since has bought back only about 20,000 shares or so. All the buying was done in the $3.5 to $4.5 area (probably what provided some of the support in late August and September. Thus here, when we are bouncing against the $8 to $10 area, I am not sure if it is significant anymore.
The details of this are spelled out in the SEC filings for that Q, but Lev didn't sell any stock. The insider reports by some agencies are incorrectly reporting this. Essentially Lev exercised a bunch of options and bought stock from the company at slightly over $5 per share. He borrowed the money to do this from the company, and the first interest payment on this debt is due in December.
It raises a question: Why would he exercise options that had a long time to run, and presumably some time value, only to pay interest on debt? My conclusion is its based on the tax treatment of these options. If you're familiar with qualified incentive options, the IRS will tax the amount the options are "in the money" as ordinary income when the options are exercised. Since Valence stock traded right at the exercise price at the time the options were exercised by Lev, he will avoid paying taxes on the appreciation of the stock, until he sells the stock. Of course, he would only take the risk of early exercise, if he was very confident the stock price would go up. Right now, he has a paper gain of about $1.5M on the stock he bought.
There has been no significant insider selling over the last year, excepting selling by the former CEO Cal Reed and another former key technical officer, Masuda. From what I understand, they had to sell some stock to exercise expiring in the money options. They still hold significant stock positions, and apparently still have a few unexpired options outstanding. I wouldn't surprise me to see more selling by them when they have to exercise their remaining options.
Enjoy.
Paul |
