Stenzrob's specials

[stenzrob]

Do I detect a little FEAR in your last post or is that WISDOM speacking. ===> MEA

Any number of analogies come to mind here. Let's say you don't know what a train is, or if being hit by one would hurt. You're standing on these metal rails one day and a train comes along. You think, "Hmmm, that's interesting, I wonder what it is." Whap! "Ouch" After your recovery, you're out playing on the tracks again one day, and something is coming. You're not exactly sure if it's a train or not, it looks a little different than the one that hit you before. Is it fear or wisdom that causes you to decide to step off the tracks to watch it go by?

Of course, the analogy breaks down in that there appears to be no reason to be out playing on the tracks again. Where's the benefit? If there's some reason for you to be on the tracks, some possibility of benefit, then if you give up the potential benefit by never returning to the tracks, that's fear. Staying on the tracks for as long as possible before the train comes, that's "trading without fear".

[IamOrion]

Stenz, are you still holding AUO?

[stenzrob]

Secondaries and insiders

Stenz, are you still holding AUO?

Short answer: Yes, I am.

Long answer: I see that AUO priced a secondary offering at $16. I am really getting chewed up lately by successful and growing companies whose stock shoould continue going up issuing more stock. Just as in QUIN and APTI, it's not the dilution that bothers me, it's just the sheer weight of all those shares coming on the market. I'm very glad I jumped out of APTI ASAP when they announced their secondary. I got out at $13.50 within an hour of their announcement with an 8% profit, and the stock has now headed straight down for the last two days to below my original purchase price. One difference in AUO's case is it may have the trading volume to work it off quickly, so I will just hold on. I hereby resolve to watch more closely for filings or announcements of secondary offerings in my holdings in the future.

I also used to scoff at worries about insider selling as expressed so eloquently by some on the Yahoo message boards, until PDEX hit a wall with Coss filing a very large quantity to sell. There just wasn't the volume to absorb it and it dropped steadily and hasn't really recovered yet. He filed to sell 400,000 shares on March 8, average daily volume is below 50k. The stock was at about $2.75. I was down a little bit when it was $2.75 and lost a lot more before finally getting a clue and bailing out at $2.05 in early May. It has fallen all the way to $1.75 and rebounded slightly, and closed today at $2.05. He wasn't able to unload the whole 400k before the time expired (90 days), so has just filed again to sell 95k shares. Meanwhile, the average daily volume is now down to around 20k shares, because nobody is buying as long as this jerk keeps trying to sell way more than the market can bear. If I had been paying closer attention, I should have sold for the small loss the minute I saw a filing to sell almost ten times the average trading volume. Insiders exercise options and sell, this is part of their compensation. I understand this and I'm not opposed to it. But if they are trying to sell a significant portion of the trading volume, the market price will suffer. I resolve to watch more closely for filings by insiders to sell large quantities of stock relative to the trading volume for my positions.

I'm actually getting a little concerned about WITS in that regard. Directors, the president, chairman, senior VP's, all are selling thousands of shares a day, ever since the price cleared about $11 back in February, which is where I first bought it based on the momentum and valuation, my usual criteria. From last October to February, the price ran from from under $5 to over $11. Revenues growing like crazy, earnings moving into the positive realm, good looking chart. Then all the officers started cashing in, but there has been enough demand to have it continue up a bit more. But if these %^#$ insiders don't stop their constant unloading soon, they will manage to turn it right back around again, and I do not want to be left holding the bag. I'm actually starting to get a bit jaded about this - if they cash in at between $11 and $14 enough of their options issued when the stock was $2 or $5, not only do they get to pocket the cash, they can actually turn the stocks momentum around, causing the stock price to fall to a very undervalued level, where more options will be awarded. It's all perfectly legal. And the institutions are no dummies, they know this could happen, so they might just join in the party as well. When the price stops falling and the volume finally dries up from all the retail dupes finally giving up, they start buying again, and the cycle repeats.

Sorry, I got a bit carried away. Really, I used to laugh at these kinds of conspiracy theories. I'm really starting to wonder, though ...

[Websman]

Stenz,
I got out of wits at the same time as snci. I made a very small profit on wits and broke even on snci. As far as conspiracies and insider selling, I'm also starting to think that it makes sense.

It's looking like we've got to start changing our way of thinking and try to stay ahead of the madness in the market.

[New-born baby]

using your wits about WITS

Gentlemen,

Paul's Breakout section on the IBD message board was talking about WITS just yesterday, and how they urged people to dump it more than two months ago. In any case, what about this idea: when the insiders sell, you sell too, as in short the stock. In other words, join the conspiracy. Remember, the trend is your friend . . . . and don't argue with the market.

[jiesen]

options

I don't suppose they expense any of those options that are keeping this company's stock price down despite the 'positive earnings'. Of course it's not like they REALLY cost anyone any money, right? (just the investors who believed the earnings were what the option holders said they were)

[Websman]

Re: using your wits about WITS

Gentlemen,

Paul's Breakout section on the IBD message board was talking about WITS just yesterday, and how they urged people to dump it more than two months ago. In any case, what about this idea: when the insiders sell, you sell too, as in short the stock. In other words, join the conspiracy. Remember, the trend is your friend . . . . and don't argue with the market.

so...where do we track the insiders?

[IIC]

To be honest...I'm not all that worried about what the insiders are doing...What kind of options are they getting now?

In my searches, I ran across some kind of expensive insider info site this week...but for the life of me I cannot remember the addy...Sorry

[New-born baby]

insider info

Websman,

Insider sales/buy info is available for a price. I get a service email that sends out alarms for insider buys and sales. I'll notify you the next one I get. For the life of me, I cannot remember the service's name or web address. "spy glass" something or other. I am not paying any attention to insider moves right now because I am not on any momentum plays.

I would say that Wm. O'Neil says "don't argue with the market." And when these guys dump stock, I don't argue with them either. Remember NoShyLady's post about AACE (I think that's the company she mentioned) and the insider dumps. Disaster followed quickly.

You could buy AY.un (on the Toronto Stock Exchange) for $8.75 US and get a 17.7% dividend (that's $2.175 C$ or $1.60 US) and you are paid monthly (13.333 cents US per share per month). Oh, and only 40% is taxable. It's an oil & NG trust. And you don't have to worry about insider sales because the gravy is so thick nobody wants to sell.

[New-born baby]

Insider Sales Info

Websman,

If you want to know what the insiders are doing, and how many shares, and at what price, the place to go is INSIDER MOVES.COM. They have a weekly newsletter for free, and for serious info, you can pay for the premium service.

The best investing to you always,

[lindsayleeds]

Secondaries and stock price

I'm very glad I jumped out of APTI ASAP when they announced their secondary. I got out at $13.50 within an hour of their announcement with an 8% profit, and the stock has now headed straight down for the last two days to below my original purchase price.

I agree with your sentiment about jumping out on secondaries for the most part. I jumped out of BDY immediately when they announced a secondary of 40% of their float. They dropped from $31 to $22 very quickly. Most of the time stocks go down on secondaries because investors don't trust management will use the money wisely or fear it will dilute the EPS for the next year before capital investments kick in and they are short term investors, like I am. Secondaries almost always hurt short term EPS, and introduce uncertainty about the use of the funds.

I am heavily invested in PRZ which routinely raises cash on bonds convertible to stock. The stock actually goes up when this happens, because the shareholders have seen management wisely use this capital to increase revenues 50% for every 10% dilution. So it mostly comes down to what kind of confidence do you feel the market will have in management and will the extra cash from a secondary help the EPS quickly.

Most of the time, the street has little confidence in management and I feel it is best to sell immediately on the secondary announcement and wait for the price to settle and then buy back in if you feel the company is still a good bet long term.

I own a bit of PDEX too and feel your pain. The mantra of most investors is ignore insider selling, but pay attention to significant insider buying. We need to add a new clause that says except when the planned selling is largely in excess of average daily volume. Of course realistically, most small caps I have been following/buying have been killed since January. AOBO, DAAT, etc. Then I didn't really considering buying any of LETH, but it has been slaughtered too.

Good luck with it Stenz.

[lindsayleeds]

Nice morning for PDEX

Dumped my PDEX for $2.69 this morning. Looking at the press release and trying to decide if I want back in. Some people on Yahoo are saying they have .07 per share more cash than they did last quarter. If they are going to report earnings of .07, I definitely want back in. Anyhow, more research is needed.

[stenzrob]

Don't worry

Just wanted to let everyone know I'm still alive so you don't worry. The market has been going not much of anywhere, and my portfolio has just been sliding, with a few exceptions that decided to plunge rather than slide. I continue to think that most of my holdings are healthy growing companies and undervalued. Clearly, none of them have any momentum characteristic left.

Considering the gains we saw across the boards in 2003, I'm actually a little surprised at how well the averages have held up as well as they have so far in 2004.

Currently holding WITS, HSKA, LINK, HBIO, SNCI, SINT, PHMD, AUO, and my two unjustifiable picks BRHI and SDGL.

regards ... stenz

[Websman]

Good to hear from you Stenz!

I'm holding DHB and, my "wild card pick" SIRI.

DHB is looking good and SIRI is questionable.

Good luck...

[IIC]

Yeah...I was wondering where you were Stenz...I still have WITS too ...This is a real traders mkt...which is the way I prefer to invest...but due to work commitments since April I have not been able to Swing...Hopefully, things are back to normal w/ my job now...but now I need to use up 4 weeks vacation by the end of the year...Maybe I should just take some days off for trading?...Best, IIC