Scott Perry; The Seagate story.
As many of you know I have been a staunch supporter of the stock for more than 2 years. I thought I knew what was going on there but I didn't. Let's go back to 12/31/98. I called a big rally. I was right. However, it took place for reasons I didn't know about then. After the new year got started so did SEG. It went from 30 1/8 to 44 1/4 in 2 weeks. Then it dropped back to 30 by Feb. 15. On Feb. 16 there is an announcement that SEG will buy in $500 million worth of its stock this year. It had completed a previous buy in for about 16 million shares in 98.
In March there is an article in Barrons detailing the insider selling at SEG for a total of $22 million during the Jan. rally by 8 of its excs. All of them sold between 42 and 44 /14. Steve Luxco the CEO sold his 100,000 shares for 44 /14. The tip top price. No one gets the tip top price from a specialist at the top of a rally unless something is going on. All of the SEG's execs. must have been psychic gurus. The rally top lasted only about 1/2 hour. Their timing was perfect.
Usually, when a company announces a buy in of its own stock the stock rises but SEG did the opposite. The stock plunged further until it hit 25 in March. I have been commenting that the stock and the specialist were acting out of Character. It couldn't get its ass above 32 3/8. I also commented that a massive accumulation seemed to be taking place at the bottom. I thought it was the specialist covering his own shorts and buying inventory for the next rally. I was wrong! I guessed, that the specialist would use a better than expected earnings report (the third better than expected earnings report in a row) as the excuse to begin the rally. I was wrong, again! The stock went up for 1 day then plunged to 26. No news, no reason given.
Last Saturday I checked the Barrons monthly short interest figures. I was dumfounded. After 2 years of decreasing short interest from 11 million shares to 4,370,000 shares the short interest suddenly rose 42% to 6,135,000 shares for the period of 3/15-4/15. What does all this tell me?
It tells me that there is a definite connection between SEG management and the specialist on the floor. It tells me that they are deliberately holding the price of the stock down, probably until SEG completes its buy in. It tells me that the specialist is shorting above 30 but he is not covering at 25-26. That can only mean he intends to have a short rally and take it to even lower levels. If the short interest were arbitrage by a hedge fund or mutual fund there would be an asterisk next to the Barrons figures. I also know that the public is not shorting SEG at these levels, too risky. It has to be the specialist. Now, the question I have to ask is this, if specialist isn't buying at the bottom then who is absorbing all of that stock on those 8 million shares days at 25-26? $500 million is a big pencil to write with.
As my Cajun wife would say, "The fish stinks from the head down". I sold my SEG yesterday but I have learned a great deal on this BB and by watching it for 2 years. . The time to get into SEG is during a bloodbath and that is the only time. My system doesn't work for situations like the one described above. However, I've invested al ot of time and a lot of money to relearn my lessons. I am not going to waste it. I'll be back during the next bloodbath or the one after that.
PHOTOMAN
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