Another great post (his take on MZ selling shares)from capt smartjack:
Insiders - Part 1
by: capt_smartjack (41/M/Naperville, IL) 8/4/00 10:47 pm
Msg: 19226 of 19256
Earlier this week I posted about when is the best time for insiders to sell their stock. At that time, I stated I had more to say, but did not have time to say it. Now I do, so here goes.
Btrader keeps harping on the fact that insiders are selling, and not buying. When MZ filed to sell some shares, WSTL was trading around 29. MZ holds over 800,000 shares in WSTL. That put his holdings at around 24 Million dollars ON PAPER. He does not have that cash until he can sell some of his stock. If you held over 24 Million dollars in one company, and that made up the majority of your net worth, would you BUY more of that stock??? No, you would not. You would sell some and diverisfy. Btrader wants you to believe she would buy in this situation if she "belived" in her company. I don't think so.
Some companies compensate top management with high pay, some with great stock options, and some with both. Upper management is given large amounts of stock as incentive for them to make the company prosper, and make that stock worth something. MZ has done that. But, when you are given hundereds of thousands of shares in a company, there is no need for you to buy more. How often you you see people like Michael Dell, or Bill gates, or anyone else with hundreds of thousands of shares filing to buy stock. You don't.
Westell insiders ARE buying stock. The problem is that you can't see that. You can't see it because only the top executives that have to file the 144's. They don't need to buy, because they have plenty already. It is the Managers, supervisors, engineers, etc that are buying stock at these levels. But, since they don't have to file, you don't see THEIR buys. They are buying because they know the potential, and they don't already have thousands of shares.
I'm sure not many on this board remember, but MZ has not always been CEO. When he was first hired at Westell, he was a Sr VP. That was before he was given hundreds of thousands of stock options upon his appointment to CEO. And guess what MZ was doing before he got all those stock options?? Buying shares. It was either late 96 or early 97 that he bought 10,000 shares at $10. He still holds those today.
People on this board seem to forget that MZ and others have been locked out of selling by the BOD for a long time now. The BOD would not allow the Exec Officer team to sell until news of SBC, and GTE were out. They were also locked out before the Teltrend merger was announced. And they were locked out for other reasons before that. I'm sure there are more deals in the near future that will lock them out again. Guys like MZ need to sell WHEN they can, reguardless of how much higher they think the stock will go. They do not have the luxury of selling when ever they want, like you and I do. I'm sure there are many new deals in the works that could keep these guys locked out for a long time to come. This may be their last chance to sell for a long time.
I'm running out of space, so this will be continued in part 2.
Insiders - Part 2
by: capt_smartjack (41/M/Naperville, IL) 8/4/00 10:48 pm
Msg: 19227 of 19256
When Westell first went public in 1995, only 23 people held shares in WSTL as a private company. All 23 of those people were locked out from selling for 6 months. At the end of that 6 month period, Westell was trading at $80, and ALL 23 were Millionaires at THAT TIME. But, then new news was pending that locked them out again. The stock split, and then ran to $55, and most of those 23 were still locked out. By the time most of them were able to sell, many were no longer millionaires. If they were able to buy and sell when ever they wanted to (like the posters on this board), things would be a lot different for them right now.
Out of those 23 people only 14 of them worked at WSTL on a daily basis. The other 9 were Buzz Penny and BOD members. Out of those 14 people who worked daily, only 3 remain today. One of those 3 "retired", but came back to work after 6 months. He may have been doing some selling during that 6 month period. One of the 3 people that remain is J Nelson. I will leave the other 2 names out, because they were not listed in the original prospectus.
I guess the point of this is that Mr Nelson has seen many of his co-workers leave and retire millionaires. People with less shares than him. These people left the company so they could be free to trade their shares at any time, like you can. They are now free to buy and sell when they want. J is still working hard to grow this company, but also deserves the right to sell some of his shares, and lock in some financial freedom. He still holds hundreds of thousands that he plans to help grow even higher. Don't fault him for doing the exact thing that you would do in the same situation.
MZ sale of 222,000 marks his FIRST sale, but he still holds 600,000 that he plans to grow much higher. The Penny trust filed to sell 180,000 shares, and still holds 18,000,000. 180,000 seems like a lot, but 1% of your holdings is not a lot.
So, let's get off the insider selling bit, and start focusing on the great quarter that was posted a few weeks ago. This company has come a long way, and still has a great future ahead of it. The insiders will be selling some of their remaining shares at much higher prices in the future. |
