Tuesday, September 28, 2010

Reply From BB: Don't Get Too Excited Over Insider Selling

From the posting: Sep 28: Are Insiders Buying Or Selling?

  • The net sum of all the buying and selling on the stock market is zero. The market doesn't notice who owns the shares.

    The market goes up and down according to a combination of perceived value and prevailing mood.

    In investing, a funny thing happens when prices are quoted minute-by-minute throughout the working day. People start to care less about the underlying value of the shares themselves and instead become fixated on where they think their prices are headed.

    And because a stock's underlying value will ultimately be realised, the net effect for all investors of buying a stock above its value will be a loss, while the net effect for all investors of buying a stock below its value will be a gain.

    We did have some fun here:


And ...

  • From your post:

    Oracle ELJ: He exercised a share option of 10 million shares in Apr 2010 and sold these in Sept 2010. His pre and post-option exercise shares is about the same.

    Tiffany MPW: Has sold his shares in Mar 2009, Jan 2010 and Sept 2010. In all, sold down 11.7% of his initial holding.

    MHS DJP: Sold in Aug 2009 and Sept 22. He sold at the market price and then switched to exercise his share options at lower prices.

    MHS KL: (Did something quite similar to MHS DJP)

    Amazon VHB: Sold in Sept 2009 and Sept 2010 at market prices. Share options exercised at zero cost. Now holding slightly more shares (85,000) than before (80,000).


    I would not get too excited over these insiders selling. There are many reasons for these. Some may not wish to be invested in their own company. Others may already have too many stocks in their own company. Perhaps, one of the above needed some money badly for various reasons.

    What do they do with the money after selling their shares? Perhaps, some have reinvested into the stock market in other shares.

    Eh.. it is interesting to highlight all these, but what is your point? :-)


Quote: " it is interesting to highlight all these, but what is your point? :-)"

See this is where my small brains fails me.

If this was a DOWN market and all these transactions were PURCHASES instead of sales, what would be the interpretation?

And seriously, I have no point. LOL! :-)

All these are plain market facts. No extra coatings and what have we seen for 3 weeks in a row?

Think about it... the market is saying it's going up. The so-called charts are a nice uptrend but then for 3 weeks, insiders reckons it's a good time to sell. How would you want to interpret this? Me? I am nobody. I am lousy. I am obsessive. LOL!

All I did was highlight the facts and perhaps like the continuous equity mutual fund redemption, all these means nothing. :-)

And perhaps the 'negative mindset' are horribly wrong. Yeah, the short term market voting machine are saying they wrong because the markets are moving up. Hence these issues are irrelevant. Yeah, it doesn't matter what the fundamental reasonings. Most important is the market is saying they are wrong. It doesn't matter if these 'negative mindsets' understand why the market is completely rigged and fundamentally flawed. Yeah... it simply doesn't matter.

Anyway, let's look at Oracle again.

It was my intention to highlight the link to show who was selling and the past transactions made. No need to hide anything.

Anyway, let's look at Oracles's ELLISON LAWRENCE JOSEPH disposal of shares again.

Here's Oracle 'data' sheet from finviz.


( nice eh? )

And the CEO, Ellison Lawrence Josesph reckons it's a good time to dispose a chunk of his shares at around a price of 27 bucks (according to Bloomberg article ). What was interesting to note is that on finviz's data compilation on Oracle was the Street's opinion on what the stock is worth. ( Wait, I know you understand that such opinion's such be discounted but as a brief indicator, the Street reckons the stock is worth much higher and just like the general market, the Street keeps telling everyone the market should move higher. :P )

The Street's views compiled..

  • 27-Sep-10 Reiterated Barclays Capital Overweight $30 → $34

    17-Sep-10 Reiterated RBC Capital Mkts Outperform $28 → $32

    17-Sep-10 Reiterated FBR Capital Outperform $30 → $32

    17-Sep-10 Reiterated Caris & Company Buy $31 → $35

    17-Sep-10 Reiterated Barclays Capital Overweight $29 → $31

Yeah, they reckon Oracle should be worth above 30 bucks but apparently, the CEO reckons otherwise and voted with his feet.

And what was even better was that Oracle's CEO started selling on the 17 Sep, the very same day, four firms decided to uplift Oracle's target price. And yes, the gap up on the chart, happened on the 17 Sep! LOL!

ps: good or bad, I have no idea. Me just stating the facts. :D

ps: I get excited when I watch footy. Stocks and markets? They are a bore. :-)

ps: if I do get excited I do pole dancing! :-)


bonny b said...

Insiders being insiders sometimes 'sell' a stock, but in reality may be transferring to a nominee account so he can play around with those shares without further disclosures. Isn't this method too common back here too??
The market is never what it seems...fish on the table!!

Moolah said...

bonny b (hmm.. also bb. :P )

I do not think it's an 'offense' for them to sell a stock.

Again I ask one to ponder.. "If this was a DOWN market and all these transactions were PURCHASES instead of sales, what would be the interpretation?"

And don't you think it's strange?

3 weeks in a row... market has been rather on a 'stronger' uptrend but the insiders decides it makes sense for them to dispose.

And yeah.. if you go thru the stocks that have insider sales.. the insiders are contradicting the 'street' opinion of their stock, just like in the case of Oracle.

ps: I have no views.
ps/ps: I don't like fish. LOL!

madgxx said...

Insider trading is like bit torrent. Everybody does it, nobody got caught unless he is unlucky or very dumb

madgxx said...

Measat shares shot up like a rocket the day before the announcement on AK taking it private. It must have been one of those strange coincidence that so many investors all have the same dream the night before that AK told them to buy Measat the next day.