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Technology Stocks : USWeb (USWB) -- Ignore unavailable to you. Want to Upgrade?

To: Racso who wrote (927)	5/20/1999 1:32:00 AM
From: Rick	Read Replies (2) \| Respond to of 1188

Racso - Insider selling needs to understood as a component of the investment decision. It is equally wrong to suggest it's not important, as it is to suggest it's the most important thing. It is merely one factor to consider among many. The thing that bothers me so much about the USWB selling is that it has been so strong right from the beginning, including a secondary offering within a few months of the IPO. And it has occurred at nearly all price levels - it's not just that they were willing to sell at 40, but have been willing to sell at just about every price level from the beginning. This suggests to me that insiders know that it's a sellers market. They just aren't being very tight with shares, and I would bet that this will continue for the forseeable future. I can't verify your figures, but here is my initial reaction: 1) using the 4.2% ratio of the value of shares sold to the current market capitalization is somewhat of a twisted statistic and here's why: your denominator (current market capitalization) is a function of current share price; your numerator is a function of past share prices. so, the higher the current share price, the lower the result of the calculation. so, one might argue that the lower the number, the more suggestive that the stock is overvalued today, since it means insiders sold their shares at lower prices than the current price. but, i think that you are arguing that a low number is good. bottom line is that it is not a very straigtforward statistic, and i don't have an opinion what would be a good number. under the keep it simple philosophy, i am much more interested in how many shares have insiders sold, what is the timing, what is the average price, and have any insiders sold a majority of their position (i am not sure but I think Firmage might have sold most of his). 2) I can't find any other companies that have such strong insider selling. Some have suggested that this is a function of there being more insiders than most companies - might be true but I am skeptical. It seems to me that if insiders had more confidence that the share price would rise, they would not be as loose with share selling as they have. Anyway, everybody needs to make up their own mind whether the selling is a significant indicator, but to dismiss it outright doesn't seem wise. Compared to most companies it is high, but maybe the insiders are selling shares too cheap or need the money, only time will tell. rick. p.s. i may take a stab at compiling some stats as well.