Thought everyone might enjoy this---- sorry if it has been posted already.
Dave
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Paul Ciampoli: on insiders
a feature of the Ideas for Investors web site
Leftovers And Oil Rigs
Week of December 21, 1998
by Paul Ciampoli
WASHINGTON (FFBN) - What do leftovers and oil rigs have in common?
At first blush, not a whole heck of a lot.
But in recent weeks, an impressive round of stock buying by CEOs at Tupperware Corp. (TUP), the well-known maker of plastic food storage containers, and Global Industries Ltd. (GLBL), an offshore oil rig builder, may have investors wondering whether the commonality of apparent bullishness exhibited by Tupperware CEO E.V. Goings and Global CEO William Dore makes today a compelling time to consider picking up shares of these firms.
As first reported by Federal Filings Business News, Dore, chairman, president, and CEO of Global, purchased 500,000 shares of the company's common stock on Oct. 19 at a price of $6.80 per share, bringing his overall ownership in Global to an impressive 27.1 million shares. The purchases follow on the heels of an earlier wave of buying by Dore from Oct. 7 through Oct. 14, when he picked up a whopping 830,000 shares at a price range of $6.50 to $7.47 per share.
Investors might look upon Dore as a pretty savvy market timer, given that he unloaded a sizeable number of Global shares while they sat at a price of just over $20.00 a share earlier this year before the stock tumbled to more recent levels of $5.69.
At the same time, Wall Streeters may view the recent purchase by Goings as all the more intriguing given that several other insiders at the company have also been consistently nibbling at Tupperware's stock in recent months, perhaps signaling that a consensus bullish view has emerged at the company.
However, market players should not view either of these situations as conclusive proof that shares of Tupperware and Global are primed for a nice upswing in the near future. As this column habitually warns, the recent spate of insider buying by the top decision makers at each firm should be used by investors as a first hurdle in determining whether or not further research into Tupperware's and Global's fundamentals is warranted.
Dore sold one million shares of Global stock from March 23 through March 27 at a price of $21.00 per share. Since that time, the value of Global shares has eroded steadily, as the company has suffered along with the rest of the oil patch in the wake of stagnant world oil prices.
While Dore certainly appears prescient in his moves, investors should keep in mind that insiders, along with just about everyone else, are lousy at timing equity markets. A check of newswires reveals that Dore has sold fairly large chunks of Global shares over the past several years going back to at least March 1996. During that month, he parted with 189,000 shares of Global at a price range of $19.50 to $19.88 per share. In June and July of 1996, Dore sold another 189,000 shares of the company at a range of $29.75 to $30.00. About a year later, he unloaded another 1.2 million shares in August 1997 at a price range of $31.50 to $32.03 per share.
Dore's habit of selling shares in fairly large quantities over the past couple of years begs the following question: when Dore parted with his one million shares earlier this year, was it spurred by an intuitive sense on his part that Global's stock was headed south or was it part of a wider pattern of his selling shares at a fairly regular clip? That's something to consider as investors try to pick apart the meaning of Dore's recent buying activity.
Other than Dore's impressive buying spree in recent months, there has been a noticeable lack of enthusiasm on the part of other insiders at Global for shares of the company, even as they continue to sit near 52-week lows of $4.72. Along with the absence of other insiders joining Dore in buying shares this year, at least one executive at Global has actually sold shares in recent months. Lawrence McClure, a Global vice president, sold 12,704 shares of the company's stock on Oct. 19 at a price of $8.25 per share, leaving him with ownership of 8,164 shares.
In the case of Tupperware, investors may find it heartening to see that Goings has been joined by several other company executives in picking up shares. Goings, Tupperware's chairman as well as CEO, purchased 400,000 shares of the company's common stock from Nov. 17 through Nov. 25 at prices ranging from approximately $18.65 to approximately $19.65 per share. As of the end of November, he directly held 473,290 shares of Tupperware.
A Tupperware spokesperson told Federal Filings Business News that Tupperware's board in November approved a special retention program for Goings that included a one-time loan for the purchase price of 400,000 shares of Tupperware stock. According to the spokesperson, Goings won't be able to sell the 400,000 shares for a period of four years. The loan is repayable in eight years.
Insiders at Tupperware were fairly active buyers of the company's stock in September and October as well. During that timeframe, a total of eight Tupperware executives scooped up a combined 23,500 shares of the company's stock at prices ranging from $11.69 to $16.56 per share. Included among the buyers during the September-October period was Goings, who bought 10,000 shares on Sept. 23 at $13.79 per share.
The Tupperware spokesperson pointed out that aside from the 400,000 share block bought by Goings last month, all of the remaining recent insider buying activity at Tupperware did not involve loans to company executives.
The broad-based nature of the insider buying at Tupperware contrasts sharply with Dore's lonely bullish stand at Global and therefore may encourage investors to take a closer look at Tupperware's stock given the seeming positive consensus that exists among executives at the company. But be careful with the notion of "consensus," especially when it comes to insider buying and selling moves. While insiders at Tupperware may find it hard to resist shares of the company while they linger in the teens, off from 52-week highs of $29.00, Wall Streeters should not take that to mean that the stock will return to lofty levels anytime soon. Regardless of how many insiders are buying stock at a given firm, corporate executives are by and large value players when it comes to personal investing habits, often times looking years down the road for a return on their initial investment.
Setting aside the insider buying activity for a moment, investors should take a closer look at some of the factors that have driven shares of Tupperware and Global down and the prospects for the companies going forward.
Tupperware's stock came under some selling pressure in late October when, as part of its third quarter earnings report, the company disclosed weakness in international operations, which offset improved U.S. results, and warned that it expects a 20% to 25% decline in net income for its fourth quarter, excluding any positive impact from foreign exchange rates or the impact of a 1997 charge. Tupperware's warnings appear to have overshadowed the fact that its net loss for the third quarter ended Sept. 26, 1998 of 11 cents per share beat analysts' estimates of a loss for the period of 12 cents per share. Shares of Tupperware tumbled from a price of $17.19 per share on Oct. 19, the day of the release of third quarter results, to a close of $15.63 on Oct. 20. The stock recently traded hands at $16.56 per share.
A handful of analysts surveyed by First Call see Tupperware earning 59 cents per share in its fourth quarter, which compares with the 76 cents per diluted share, excluding charges, that the company earned in the same period last year.
Meanwhile, any investor interest in shares of Global should probably be tempered by the fact that the company, along with the rest of the oil patch, remains prostrate as world oil prices continue to suffer from excess supply on the world markets....
(Read this column in full on Federal Filings Business News and Ideas for Investors site).
-- Paul Ciampoli
Assistant Managing Editor
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