Insider Trading (September 2001)
Listed below is a regularly appearing column of insider transactions for selected publicly-held companies in semiconductor-related businesses, which have filed with the U.S. Securities and Exchange Commission. The information and commentary is provided to SBN by First Call/Thomson Financial in Boston.
chip insiders keep selling off stock
Back in June, we highlighted a disturbing trend of insiders selling semiconductor stocks into an unexpected late-spring ramp (see June 20 story). The question backin June was why not sell a little? After all, hadn't the chip sector had ricocheted some 50% off an April 4 bottom, and in some cases, a whole lot more.
Our concern at the time was twofold: First, despite the sudden pop, most of the semiconductor stocks remained mere shadows of their former selves. More to the point, convincing as it was, the rally seemed to have been born of little more than wishful thinking.
Those unfortunate enough to have bought the semi index at the rally peak, say on or around May 1, are down a bit more than 15%. Nothing to brag about certainly, but it could have been worse.
Unfortunately, insiders aren't taking the recent weakness as an opportunity to stock up on chip stocks. Quite the contrary, insider selling in the group, which never altogether abated, has resurfaced with a real vengeance.
Perhaps most troubling about the persistent insider selling in the semiconductors is that so little has changed fundamentally since we highlighted the sector back in June. True, we are invariably further along in the down cycle than we were in June. And true again, inventories have to some degree burned off.
The fact remains, however, that we have seen precious little evidence that orders have picked up or even that a pick up is imminent-much less that valuations in the group are anymore sustainable in the wake of more than a year of declining revenues. (Editor's note: This column was written prior to Tuesday's shutdown of U.S. stock markets after terrorist attacks in New York, and many analysts remain uncertain how investors will respond to the crisis when trading resumes next week.)
Question: Is this to say that we aren't nearing a bottom in the semiconductor business cycle or, more importantly for investors, a bottom in the share prices of chip stocks? Not exactly. After all, these stocks will invariably turn before we see a turn in business. At the same time, it hardly seems logical to presume that insiders would continue to sell these stocks if they sensed a recovery on the horizon.
Until those in the trenches stop selling semiconductor stocks, it might be best to wait on the sidelines where it's safe. --Paul Elliott, Thomson Financial/First Call in Rockville, Md.
Insider Selling at Selected Chip Stocks Since June 1
|Source: Thomson Financial/First Call
John C. East, president, exercised an option for 17,614 shares of common between $4.00 and $7.63 each on July 12. To cover the expenses of transaction, East turned in 4,960 of them and now directly and indirectly holds 162,454.
CIRRUS LOGIC INC.
Gerald R. Gray, shareholder, exercised an option for 2,750 shares of common at $7.13 each on July 27 and sold 2,750 shares between $18.23 and $18.29 each on July 27 and now directly holds 549.
Conor Omahony, officer, sold 1,334 shares of common between $16.35 and $16.42 each on Aug. 31 and now directly holds 2,582.
Joseph G. LaChapelle, vice president, sold 1,428 shares of common at $17.22 each on Aug. 27 and now directly holds 240,000.
MAXIM INTEGRATED PRODUCTS INC.
James R. Bergman, director, sold 10,000 shares of common at $47.69 each on Aug. 24 and now directly and indirectly holds 170,000.
MENTOR GRAPHICS CORP.
David A. Hodges, director, exercised an option for 4,000 shares of common at $12.88 each on Aug. 24 and sold 4,000 shares at $16.92 each on Aug. 24 and now directly holds 4,400.
MICRO LINEAR CORP.
W K. Dobson, vice president, exercised an option for 30,000 shares of common at $2.06 each from Aug. 22-28 and sold 30,000 shares between $4.20 and $4.60 each from Aug. 22-28 and now directly holds 0.
Robert F. Logan, director, purchased 5,000 shares of common at $19.45 each on Aug. 17 and now directly holds 20,000.
Andrew W. Elder, director, exercised an option for 5,000 shares of common between $1.44 and $2.69 each on Aug. 31 and sold 5,000 shares between $10.50 and $10.55 each on Aug. 31 and now directly holds 15,000.
Ralph A. Griffin, vice president, exercised an option for 15,000 shares of common between $1.47 and $5.44 each on Aug. 1 and sold 15,000 shares between $10.11 and $10.18 each on Aug. 1 and now directly holds 1,250.
(Click here for last month's Insider Trading column.)