Silicon Valley: Bam! Insiders File to Sell
Books-A-Million Stock
By Suzanne Galante
Staff Reporter
12/11/98 4:32 PM ET
SAN FRANCISCO -- Following a huge surge in shares of
Books-A-Million (BAMM:Nasdaq) in recent weeks, company insiders
and their family members are lining up to sell shares-a-million.
Books-A-Million arose from retailing obscurity on Nov. 25, when it
issued a press release to announce its "newly enhanced" Web site at
www.booksamillion.com that the company said "offers some of the best
prices on the Internet for books." Within three trading days, the stock
rose from a low of 4 1/2 to a high of 47. Just three days later, insiders
filed to sell $49.3 million worth of shares, or about a quarter of their
holdings in the bookseller.
Books-A-Million's share price has languished below 10 since June 1996.
Since then, insider selling had been quiet until Dec. 3 and 4, when
insiders submitted 32 filings with the Securities and Exchange
Commission saying they planned to sell 1.6 million shares of
Books-A-Million's stock, according to Edgar Online. During those two
days, the stock was trading between 11 1/2 and 15 1/4.
Books-A-Million was trading at 11 3/8 Friday afternoon, down 6% from
Thursday's close, but still up more than 150% from where it was when
the revamped site was announced.
Insiders owned 6 million shares, or 34% of the company, as of April 14,
according to the company's most recent proxy filing. In the two days
after the company's Internet announcement, the value of that stake rose
from $26 million to $233 million. The 1.6 million shares that insiders and
their family members filed to sell represent 27% of that stake.
Among those cashing in were CFO Sandra Cochran, who beneficially
owns 92,928 shares and exercisable options, according to CDA
Investnet, which tracks insider selling. In the December filings,
Cochran filed to sell 69,928 shares, or about three-fourths of her
shares and exercisable options. In theory, a CFO should have the
clearest view of a company's financial health, so when a CFO files to
sell the vast bulk of his or her holding, it can raise alarm among
investors.
"I wouldn't think that's a very encouraging sign," says Paul Elliott, a
research analyst for CDA Investnet. "It seems that they don't feel
confident that these prices are going to stay where they are or go
higher."
Over the same two-day period, Terrance Finley, the company's senior
vice president, filed to sell 32,400, more than half his exercisable shares
and options. Clyde Anderson, Books-A-Million's president and CEO, filed
to sell 442,300 shares valued at more than $13 million, while Chairman
Charles Anderson filed to sell at least 397,047 shares valued at nearly
$12 million.
Executives and directors at Books-A-Million didn't return repeated calls
for comment.
The 144 filing with the SEC is an intent to sell shares and not an actual
sale. But Elliott says it's extremely rare for an executive or insider to file
a 144 form and not actually sell the shares.
Books-A-Million is one of a group of companies that have seen their
stocks surge after announcing a move toward selling goods on the
Internet. Small investors have pushed the share prices of companies
such as K-Tel (KTEL:Nasdaq) higher in a matter of days -- or even
hours -- in the wake of such news.
"This sector is speculation gone amok," says Elliott. "Since [insiders] are
selling so quickly after the run, they don't see [the Internet] as the start
of something new, something big" like some analysts have been
proposing, he says. "It just doesn't seem like the insiders are buying
that."
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