Tuesday, September 8, 2009

Record Insider Selling Continues

Insider selling in the months of August and September is hitting record highs particularly in the consumer discretionary arena. Case in point being Dick's Sporting Goods  (Ticker: DKS) where the company management has been selling stock after raising earnings guidance. In a story titled Analyst Sees 'Disconnect' in Words, Deeds at Dick's, the Wall Street Journal outlines the disconnect:

Dick's Sporting Goods Inc.'s chief executive and vice chairman had been buying the Pittsburgh company's stock last year. Lately, they have been sellers. Chief Executive Edward W. Stack and Vice Chairman William J. Colombo were joined last week by director Lawrence J. Schorr in selling a combined 120,000 shares at prices ranging from $22.25 to $22.81 a share. This after Messrs. Stack and Colombo, starting May 27, 2008, and concluding in November, bought 177,000 shares. Mr. Colombo, in particular, was a timely buyer then, paying nearly $950,000 to get 71,000 shares at an average price of $13.37 each.
"It's a little odd, especially coming from a CEO, to see buys and sells within a short period of time," says Ben Silverman, director of research at InsiderScore.com, a Web site that tracks and rates insider transactions. "The way I look at it, it's a red flag. It's a negative sentiment indicator."
The shares got a boost last week when the company raised its earnings forecast. Mr. Silverman said the insider sales contrast with the company's rosier view for earnings. "There's a disconnect between what the insiders are doing in terms of their stock and what the company is saying in terms of guidance," Mr. Silverman said.

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