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Large insider buying!!
Old 01-04-2008, 04:28 PM   #1
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Large insider buying!!

Having followed the bank stock thread on this forum, another poster mentioned keeping an eye on the insider trading - and uses the insider buying as an indicator that it might be time to buy.

Good or bad? Comments?

How about a retail stock where the major stock holder has purchased $15m worth since November 26?....that's a little over 765,000 shares.

Is he just trying to cover his butt by single handedly trying to keep the stock price up, or does he know something that I (we) don't??

Opinions?? Comments??
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Old 01-04-2008, 04:47 PM   #2
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Originally Posted by VaCollector View Post
How about a retail stock where the major stock holder has purchased $15m worth since November 26?....that's a little over 765,000 shares.

Is he just trying to cover his butt by single handedly trying to keep the stock price up... don't??

Opinions?? Comments??
No one would be that moronic. What stock is this?

Or are you sworn to secrecy?
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Old 01-04-2008, 05:06 PM   #3
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Your gonna think this is funny, but I just may be.....and I will have to check with by DW to be sure that I am not putting her in jeopardy....as she is the "big wig" with the company and I am the lowly, stay at home DH....

I really don't see how it could be a problem as what I'm telling you is public information, but just to cover my bases, my arse and my marriage, I'm gonna check with her 1st.....and women think we can't be taught anything

Edited to change my signature to "whipped" ....ha,ha
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Old 01-04-2008, 05:09 PM   #4
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If its public information, just point an url at it.
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Old 01-04-2008, 05:13 PM   #5
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Hey....marked it on my calendar....I was right for once!

LTD .......Limited Brands......which includes Victoria's Secret, Bath & Body Works, etc.

Stock purchases have been by largest stockholder and founder Les Wexner......

What do ya think Ha Ha?? Anybody else??
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Old 01-04-2008, 05:58 PM   #6
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Thanks VaCollector.

Leslie Wexner knows his business. I haven't looked into the company. They have made at least one huge turnaround before- Victoria's Secret.

It is sure worth more looking.

Ha
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Old 01-04-2008, 06:16 PM   #7
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based on my professional observation of seeing people in various states of undress, I can comment that Victoria Secret is very popular.

Got a comparable "male" company you want an opinion on?
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Old 01-04-2008, 09:36 PM   #8
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A positive, I suppose, but that's 1/4 of 1% of the market cap and he's a billionaire (isn't he) so . . .

My experience is that insider buying makes me feel better but isn't an indicator in and of itself. Well, more of a long term indicator than a short term one. I've seen plenty of instances of insiders catching their own falling knife.
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Old 01-04-2008, 10:19 PM   #9
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My experience is that insider buying makes me feel better but isn't an indicator in and of itself. Well, more of a long term indicator than a short term one. I've seen plenty of instances of insiders catching their own falling knife.
Nothing can save us from buying a stock that goes down. Like you point out, insiders are no better than anyone else at figuring out market moves. But generally though not always, they are pretty good at not buying into dying businesses, or into stocks that are overpriced from a long term POV. After all, stock and options rain down on their heads regularly. If they buy more it is becasue they have a high expectation of making money.

This IMO is very valuable information for a bargain hunter, even though it is not perfect.

This doesn't necessarily apply to corporate buyers, and occasionally it has been faked by officers. I don't remember for certain, but I think it was Healthsouth that gave insiders non-recourse interest free loans to buy stock on the open market, in hopes of arresting the death spiral of that stock. (And probably giving Scrushy a shot at getting his options into the money.)

Ha
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Old 01-05-2008, 04:42 AM   #10
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I 100% agree with what haha and terminator have said.

It looks like a good stock with respect to its fundamentals (I like the 33%ROE 1 PEG and 6,11 EV/EBITDA).

But it is still -4,4% cheaper now that it was yesterday.
Next support is 15$ (and will probably go through before you read this answer) and next one is 11$ which will be kind of a 40% loss from where it was when you posted.

A good stock purchased cheaper is always better.

And purchased @ a slightly more expensive price than the trash but with a positive momentum (say at least ROC(MM200)>0) is even better !

It all avoids wasting money and time.

In the meantime it was a good SHORT on the 13th of Dec @ 19,5 with an initial stop buy @ 21,1$ just 8,2% away... Today I would have moved down the buy stop @ 19,36 and would at no risk let the position unfold :-)
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Old 01-05-2008, 09:15 AM   #11
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Victoria's Secret has recently changed it's marketing .It now markets to a much younger audience .Early teenagers instead of the twenty ,thirty and fourty year olds it was marketing to . Will this help their sales ? Maybe ,since mall traffic is young but they are eliminating a lot of faithful customers with this change .Sorry guys , didn't mean to hijack your thread .Just wanted to add a women's thoughts .
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Old 01-05-2008, 12:56 PM   #12
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I like seeing a large insider stake and I especially like seeing sustained insider buying. I am seeing more insider buying now in certain companies than I have seen in a number of years.
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Old 01-05-2008, 03:01 PM   #13
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Nothing can save us from buying a stock that goes down. Like you point out, insiders are no better than anyone else at figuring out market moves. But generally though not always, they are pretty good at not buying into dying businesses, or into stocks that are overpriced from a long term POV. After all, stock and options rain down on their heads regularly. If they buy more it is becasue they have a high expectation of making money.
Yep, I agree, I have just gotten more cynical the last couple years as a few of my companies have done some atrociously timed buybacks and special dividends. Now, that's different than insider buying, but people tend to look at buybacks similarly and since those are the same people that would be doing the insider buying it makes me question their competence.

I think it's always a sign they think they'll survive (no one wants to throw money away), but I also think it's different when you're talking about a billionaire who has his money and ego in an entity and when you're talking about a professional manager who owns a tiny percentage. The billionaire may not care as much whether he makes a lot of money -- he's more interested in control and his empire. The CEO-for-hire is probably more likely to have dollar signs as his bottom line.
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Old 01-05-2008, 03:48 PM   #14
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Yep, I agree, I have just gotten more cynical the last couple years as a few of my companies have done some atrociously timed buybacks and special dividends. Now, that's different than insider buying, but people tend to look at buybacks similarly and since those are the same people that would be doing the insider buying it makes me question their competence.
More likely it is their motivation in question, not their competence. No matter what the corporation pays for shares it buys in, it will shrink the denominator in eps calculations. Which often will help mangement raise their performance based incentive pay.

At the same time it gets rid of pesky cash that can attract buy-out artists.

Ha
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Old 01-05-2008, 08:44 PM   #15
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At the same time it gets rid of pesky cash that can attract buy-out artists.
Yep, I've had that happen three times over the last year with my companies. It drives me nuts as one of my primary investing criteria for my core portfolio is a low debt, healthy balance sheet . . . and they've been taking on debt to do buybacks or special dividends. I sold the one after they announced it and I should have sold the other two.
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Old 01-06-2008, 10:11 AM   #16
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I tend to favor Jay Shottenstein's insider buys @ American Eagle. I think he is a superb CEO/retailer not to mention his buys/sells are usually very timely. Just the other week he purchased a large stake in DSW and the stock jumped on the news. If you were to buy, you would be getting in below his purchase price.

Meryl Witmer is also holding a nice stake in stock as well -- she is always a good contributor to the Barron's Roundtable. I imagine she will discuss her thesis in the upcoming issue.

Hard to pick a bottom and might be early to jump into retail but I tend to understand the sector more so than banks with all of their derivatives/off balance sheet jargon. The retailers are getting beat up and becoming more attractive, just might be early from a short-term perspective.
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Old 01-08-2008, 10:38 AM   #17
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Yes, it's a good indicator; short interest is a better indicator. No guarentees though.
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Old 01-08-2008, 10:52 AM   #18
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First, if your wife works for Victoria secret, do you get the employee discount? My cousin used to work for Victoria secret and when my wife visited, let's just say she used the discount and I enjoyed the fringe benefits.

Second, there is a dividend on this stock. Meaning the execs buying stock gives them a way to get some extra income without selling. I've always thought the reason MSFT issued a dividend was to allow Bill Gates a chance to liquidate some of his fortune.
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Old 01-08-2008, 11:25 AM   #19
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I bought Victoria's Secret when it was spun off from the Limited as Intimate Brands. It was shortly after 9-11, and it was priced at about 9 times earnings. I guess people thought the terrorists were going to keep women from buying underwear

It doubled very quickly and then the Limited sucked it back in. I wasn't interested in the crap brands the Limited had (Express and Limited stores), so I sold.

It looks like they got rid of the bad brands now, but they've made the balance sheet a little iffy with all of their stock buybacks. I wish these folks would just run there business and stock trying to force their stock up. The stock will go up if they just stop screwing around with it.

If they settle down and run the business for a couple years, and pay down some debt, without anymore financial engineering, this is a company I'd like to own. I think of it as the Coca Cola of women's underwear


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First, if your wife works for Victoria secret, do you get the employee discount? My cousin used to work for Victoria secret and when my wife visited, let's just say she used the discount and I enjoyed the fringe benefits.

Second, there is a dividend on this stock. Meaning the execs buying stock gives them a way to get some extra income without selling. I've always thought the reason MSFT issued a dividend was to allow Bill Gates a chance to liquidate some of his fortune.
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Old 01-08-2008, 12:04 PM   #20
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It actually sparked my interest so I researched it some more. I think it's just a bullish stance. It's only one insider who made the purchases, and it was a position change of 90,000. That doesn't appear to be a whole lot to me.

A similar example is Pep Boys (PBY) with lots of recent insider trading, probably right before the upturn on the price.
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