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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: xamir who wrote (3381)	5/22/1998 12:03:00 PM
From: LK2	Respond to of 9256

Yogi, >Anyone follow insider activity at SEG?< I don't follow insider activity at SEG (or anywhere else, for that matter). I tried following insider activity in general back in the early and mid 1990's. My impression (as an amateur) is that it's hard as heck to get any useful, predictive indicator from insider activity as far as future movement of stock prices. What I'm talking about is a major signal that a stock or group is going to move very strongly up or down, in a fairly short period of time (six months or less). Services that sell data on insider activity promote the predictive value of their data. And maybe, on a statistical basis, you can make money following the data. But unless you're dealing with very special cases, where you have a background knowledge of insider activity in general and the particular stock or group in particular, I don't think that insider activity is very useful. Call it one more tool that you might use (or try to use.) I do remember , as I've posted before, that SEG insiders sold millions and millions of shares when the stock was around 8 (the stock was really around 17, but it split 2 for 1 in 1996). After the sales, the stock only went up to a high of 50+ over the next few years. My memory is not specific, and I can't tell you the specific year the massive insider sales took place. But the stock did not go down that year (after the sales), the stock went up strongly. And it went up strongly after that time as well (I think that any stock that goes from 8 to 50+ in 2 or three years has gone up strongly). At COMS, insiders were selling stock from around $10 or $11 a share, after the stock bottomed around $6, all the way up to the peak at around 320 (there were two 2-for-1 splits after COMS bottomed around $6. I'm not adjusting for the two splits). I mean, they sold millions and millions and millions of shares all the way up. To put it simply, you have to understand the basic economics. These aren't shares that are being sold. These are >free< options that are being turned into cash. Obviously, the insiders want to make as much money as they can off these options. But unless something special is going on, even though they know a heck of a lot more about what's going on inside a company (the fundamentals) than you or I, insiders are only a very general indicator of what a company's stock price might do. A few days ago Lew Gerstner of IBM sold around 3% of his options in IBM. His >profit< was $14 million. On a personal level, I don't think profit is the right term for this kind of transaction, because it's basically a risk-free transaction where he exercised options that were free and got $14 million in cash (he apparently kept 12,000 shares of IBM stock worth around $1.5 million for which he has to pay IBM $288,000. But that's in addition to the $14 million in cash for the options he exercised and sold). If you follow insider activity, it might be useful. But I don't think an insider sale of 13,000 SEG shares is very significant, by itself. Regards, Larry >>>>>>>>>>>>>>>>>>>> Message 4551051 Talk : Computers : Seagate Technology - SEG To: louis mason (5018 ) From: Yogi Thursday, May 21 1998 6:55PM ET Reply # of 5020 <<As the storage industry struggles along, William Watkins, executive vice president of disk drive operations and chief operating officer of recording media at Seagate, filed to sell 13,000 shares with a value of $346,840. The company's stock had shown signs of an upward swing from its low-20 range in January, but this month edged down from its near 30-range to the mid-20s. >> news.com Anyone follow insider activity at SEG? Doesn't quite mesh with "Worst is over" press release unless this filing can be easily explained. Yogi Note: 144 filed 5/19 <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<