By Relmor Demitrius -
Having insight into a company’s insider sentiment can be a key element in deciding where to invest ones money. If insiders of a company are dumping shares like there is no tomorrow, it would probably not be a great idea to buy shares insiders are selling. Now this of course isn’t always true. Sometimes insiders will sell shares to pay taxes, or if they want to exercise an option contract. As the case with Sirius XM Radio (NASDAQ:SIRI), they are also sometimes shares given as bonus money, when a company is trying to save cash. In lieu of cash, Sirius XM gave some insiders shares to vest and sell automatically upon maturity. When this was set up, there was no decision to be made. No weighing options, those shares had to sell. So in effect, these share sells did not offer us insight into sentiment. We now have our first sign of sentiment in 2009 going forward.
I wrote a few weeks ago that December 18th would be a great date to first gauge insider sentiment on the stock, going forward. Well apparently these option shares vesting from December of 2008 were not exercised by the 8 insiders involved. They decided to hold the option contract for .14 cents, and will in effect be adding these shares to their portfolios in “in the money” option form. This is the bullish sentiment I was talking about in my article earlier. I was looking for insiders to hold and add shares to their position here. These options don’t expire for many years, and they have no hurry to add these shares to their portfolios by exercising the option call contract. Usually when options are exercised, it is to sell them. Appropriately 212,000 shares are now for all practical purposes been added by insiders. With so many positives ahead, I don’t think too many Sirius XM investors didn’t see this coming.
When your best days are ahead, why sell?
Sirius XM ‘s stock has been steadily recovering since Liberty Media purchased a 40% stake from the company in March for a short term loan, all of which have now been repaid. This holding is tracking in Liberty’s (NASDAQ:LCAPA) ticker.
212,000 shares? I’m a Sirius bull, but that paltry amount means NOTHING. That’s pocket change–and not a true “all-in” sort of statemetn–for the insider.
Now, if you told me that it was 30 million shares, I might be more impressed.
There are so many reasons an insider may sell but only one reason why they buy, they expect it to make money. this is very bullish going forward as these guys have much more info on the company than any of us.
Aaron,
This is the very first chance insiders have had to add shares in a year. So yes, it is bullish, whether you think 212,000 shares is a lot of not. If they thought the price was never going higher than .60 again, they would have excersised and sold their shares.
Insiders have been adding to their core for years now.
I dont really care what you consider a bullish amount. Your opinion does not matter. Insiders opinions are the ones that matter.
Rel, this is the most objective and truthfull article that I have read to date on the insider trades of SIRIUS XM. The bashers have made such big deal of insider selling that was mandated…it’s good to hear the truth and provides great ammo to counter these dooms dayers. Thanks for doing your DD and putting it in writing!
you guys are soo funny. you all obviously own shares given your venom toward what you call bashers.
#1 they are not buying, you bought them when you averaged down again and gave them to the insiders for free.
Until the insiders start using their own money to buy shares this is nothing but meaningless drivel to make yourself feel good about a terrible investment decision.
Hey Superdave, no, they didnt buy them for free. Nothing is free. Its a matter of money. They can book all their gains now or wait. Hence if they are waiting, they expect to make more money later. Not a hard concept. If your having trouble understanding this concept, maybe a search under “options” “stocks” or other key investing words can begin you on the path to understanding how stocks trade. I can give you a small hint here.
If a stock is worth .58 cents today, and a holder of that stock decides to not sell it, he is assuming it will go up later at some point.
Is that clearer?
I say howard takes an all stock deal. What does everyone else think???
I dont think so Dean. No way Howard risks that. Would you? Maybe partial stock deal, but not all.
Im not saying there is long term risk, but usually people are paid in cash, not stock, at least not entirely.