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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: mr. picker who wrote (4976)	3/25/1998 7:19:00 AM
From: w2j2	Read Replies (2) \| Respond to of 6980

By Daniel Bases NEW YORK, March 23 (Reuters) - Insiders at Star Banc (NYSE:STB) have joined a broad selling trend in the last several weeks, but some top executives, like those at Bay Networks (NYSE:BAY) have resisted the urge to sell even as their shares lost value. For the most part, insiders like those at Star Banc are leery of the market's upward moves and are selling their shares even as most investors dismiss earnings warnings and push the market higher, according to analysts who track insiders. "The selling is rising dramatically in here. I'm kind of boggled by the kind of numbers I'm seeing," said Bob Gabele, President of CDA/Investnet, a research firm that analyzes corporate filings to the Securities and Exchange Commission. Selling by insiders, defined as senior corporate executives who have sizable holdings of their own companies' shares, is viewed as one tool for analyzing a company's fortunes. Historically, the ratio of sellers to buyers has been two to one, according to Gabele's reasearch. The ratio broke out of the trend lines in the later half of 1997, as more sellers came into the market. "Between August and December we have been showing steadily between three and four sellers for each buyer. The markets started tanking in late December and into early January and it went back to historical levels because the buying increased again," Gabele explained. "If you're an insider and looking at the market's rise, you're seeing prices increase not so much because of individual corporate fundamentals but more because money is just pouring into the market," said John Manley, the chairman of Salomon Smith Barney's Equity Strategy Committee. Insiders on the whole have reacted to the market strength by selling stocks and raising cash, and their reluctance to buy stocks is an indication they think market valuations are too pricey, according to Gabele. Star Banc is just one of the stocks under selling pressure in a regional banking sector that has seen particularly hard selling in the wake of insider share accumulation and rising stock prices fueled by views the sector is ripe for mergers. Besides Star Banc, Norwest Corp (NYSE:NOB), and TCF Financial Corp (NYSE:TCB) are other standouts CDA has identified. According to CDA, Star Banc saw seven insiders dispose of 194,966 shares in a price range of $54 to $60 a share during the months of January and February. High-flying Star Banc Corp is currently trading at 61, just off its 52-week high of 61-9/16. "Stock prices of many long-suspected takeover candidates in the industry have risen to levels that may actually cause them to be less attractive targets at this time than they appeared to be at lower prices," he noted. The higher stock prices might be prompting insiders to take advantage and sell, rather than wait for a possible merger proposal, Gabele said, adding: "These situations are especially interesting to us because they may point to regional banks that are not engaged in serious takeover discussions at this time." "It is uncommon to find insiders selling before significant merger activity." he said. While insiders at Star have been lightening up their positions, either selling on the open market or back to the company, one analyst who follows the Star Banc didn't sound alarmed. "This stock is one of the star performers in the industry, with management owning a lot of the stock," said Joseph Duwan of Keefe Bruyette & Woods Inc. "The stock trades at a significant premium and it is less than likely that Star Banc would be acquired," Duwan said. A Star Banc official was not aware of a specific reason for the "disposition" of stock. While the selling trend has gained momentum in regional banking and in other sectors, Gabele has been watching insiders' reluctance to sell at Bay Networks with great interest for the last several months. Indeed, insiders and at least two former executives at Bay Networks, the third largest U.S. computer networking equipment maker have exercised and held onto their non-qualified stock options even though they face a tax burden as a result. As current and former insiders hold onto their shares even as the stock has sold off in the last five weeks, analysts see indications the share price will move higher. "For anybody thinking that Bay might be a 'takeout' candidate, there isn't anything on the insider activity that would steer you away from that notion," Gabele said. Wall Street's reaction was mixed last week when Bay said third quarter sales would be disappointing. The stock barely moved after as the market digested the warning, and has even ticked upward since. Bay's stock, now at 28-11/16, off from its year-to-date high of 33-7/8 last month but above the 26-3/4 level the day the company warned Wall Street of its third quarter fortunes. Analysts note that while the insider selling has been on the upswing recently, the data on insider behavior can yield a broad spectrum of information on different companies. "You have to keep an eye on it. Every once in a while you'll get some good nuggets of information on stocks," said Manley of Salomon Smith Barney. 1717, e-mail daniel.bases@reuters.com ))