Yahoo! Insiders Watch Gains With Pursed Lips

Irony Is So Ironic

SAN FRANCISCO -- After yesterday's I-can't-believe-it's-not-butter move, Yahoo! (YHOO) shares declined 8.2% today, a setback that was expected by many.

"I'm surprised Yahoo! didn't come off more, given it was such an artificial high yesterday from being added" to the S&P 500, said Timothy Heekin, director of equity trading at Thomas Weisel Partners in San Francisco.

But before you go calling your brother's friend's cousin who works at Yahoo! to ask for a loan, consider this: The window during which Yahoo! employees can sell (or buy) shares closed on Nov. 30, the same day S&P placed its holy scepter on the online giant. Thus, Yahoo! employees big and small have been verboten from taking advantage of the stock's most recent big runup. (Still, they'll be hard-pressed to get much sympathy from me.)

Yahoo: Join the discussion on TSC Message Boards.

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Red Hots.

A Yahoo! spokeswoman confirmed the aforementioned (except the part about my being unsympathetic) and said the next window does not open until Jan. 14.

I mention this as a reminder that the gains for big shareholders such as Jerry Yang and Tim Koogle so breathlessly reported by certain news outlets are theoretical, and should not cause you consternation because your portfolio isn't doing as well.

Yet, this tidbit about Yahoo! raises another interesting question. While getting information about when lockups of recent IPOs expire is doable with a check of SEC filings, there is no formal requirement for companies to detail when employees can (and can't) trade their shares.

"Companies are adamant about keeping windows fairly quiet," said Robert Gabele, director of insider research at First Call/Thomson Financial (and contributor to this Web site).

While Gabele supports the idea of companies having to disclose the employee-window information, he acknowledges there is sometimes a need for being clandestine, such as when a merger announcement is forthcoming.

Unfortunately, there is no one-stop source for investors to get information about when a company's employees can buy and sell. (If you know of any, please fill me in, but I've just registered the domain name "www.stockwindows.com.") The best way to get the information is to call the company and look for patterns in insider buying and selling, or the absence thereof, Gabele said. For example, many companies open windows right after earnings announcements.

Knowing if and when windows occur is important because "a lot of times, people want to get bullish because insiders seem to be holding, but it may be because they have no choice," Gabele said.

Futhermore, insider selling generally dries up toward year end because there's little time for accountants to do tax planning. But "you're going to see a lot of selling in January, especially after this move," he predicted. "It's deferred profit-taking."

Ahh yes, deferred profit-taking -- the alternative to instant gratification.

Mom, Can You Sign This?

Attached below is the latest "report card" on market players featured in this column. One of the fun things about doing these is I get to go back to the pundits and ask them where they went wrong or how they got to be so darned smart (or is it lucky?) and what they're thinking about now.

Unfortunately, it's not an exact science. Oftentimes I'm unable to catch up with folks, such as John Skeen of Banc of America Securities, whose picks were stellar performers. Or sometimes, people simply haven't revisited the names mentioned previously.

Such was the case with Gabele regarding his recommendations on manufactured-housing stocks, which haven't fared so well, to be polite. (Meanwhile, Walters Industries (WLT) fell another 14.4% today after the company warned its earnings would not meet expectations; in reaction, Donaldson Lufkin & Jenrette cut its recommendation to market perform from buy.)

Jeffery Warantz, equity strategist at Salomon Smith Barney, had a similar reply -- no specific update -- when I asked about the tax-loss selling candidates he mentioned on Oct. 11, and which have generally performed well.

"As far as we are right now, we are very much in favor of communication, Internet-oriented type infrastructure names" such as Lucent (LU), Cisco (CSCO) and IBM (IBM).

Asked whether it's frustrating to not participate in the huge moves produced by (ahem) less traditional tech favorites such as Red Hat (RHAT) and Ariba (ARBA), the strategist was sanguine.

"Unfortunately you miss some great huge gains, but on the other hand they're crapshoots," he said of the Red Hots in general vs. the specific examples I've provided. "For long-term, safe portfolios you can't bank on crapshoots. It's nice when you hit one but it's also nice when you roll a string of sevens in Atlantic City. A lot of these things are puffed up on pure speculation."

Noting the firm's focus on long-term prospects, the strategist reiterated Salomon's positive outlook on financials, despite recent weakness evident again today. (For more on that, see the views expressed by Warantz's colleague John Manley in this space on Sept. 9 when the group was really looking punk.)

Before you go thinking Warantz is an old fuddy-duddy who hates to see people make money, note he is favorably disposed on technology in general. "There's a reason they're in play like this," he concedes. "But to comfortably recommend them, we couldn't possibly."

Also, he is optimistic about the markets in general and does not -- as do many of his peers -- believe the Red Hots will act as an "albatross" to bring the broader market down if and when they falter.

"The only ones who have to worry are those who sold a nice, stable portfolio to chase gains and dive in," he said.

But I'm sure that doesn't apply to any of you.

Accountability Report Card
Date	Source	Recommendation/ forecast	% up or down*
Sept. 23	Arch Crawford, editor of Crawford Perspectives	"The rather consistent picture this month is of a failed rally which will immediately lead us into a widely destructive liquidation phase."	DJIA: 7.6 SPX: 10.1 COMP: 30.4
Sept. 27	John Bollinger, president of EquityTrader.com	"We continue to raise cash and thought we'd have a better environment to raise cash into. This has all the signs of being an unfriendly time. We're not putting out shorts yet, but if it would bounce, we'd short into it."	DJIA: 7.8 SPX: 9.8 COMP: 29.9
Sept. 27	Robert Gabele, director of insider research at First Call/Thomson Financial.	Buy: Walter Industries (WLT); Washington Homes (WHI); and Oakwood Homes (OH). Avoid: Kaufman & Broad (KBH) and Dominion Homes (DHOM).	WLT: -15.2 WHI: -18 OH: -45 KBH: 16.3 DHOM: -11.2
Sept. 30	John Skeen, director of portfolio strategy, Banc of America Securities	Buy: Level 3 Communications (LVLT); Texas Instruments (TXN); Verity (VRTY); BroadVision (BVSN); Novellus Systems (NVLS); Darden Restaurants (DRI); AnnTaylor (ANN) Wells Fargo (WFC); Fifth Third Bancorp (FITB); Ciena (CIEN)	LVLT: 36.8 TXN: 26.9 VRTY: 62 BVSN: 137 NVLS: 32.3 DRI: -10.9 ANN: -0.3 WFC: 11.2 FITB: 10.4 CIEN: 64.6
Oct. 11	Jeffery Warantz, equity strategist at Salomon Smith Barney	Buy: America Online (AOL); AXA Financial (AXA); Capital One Financial (COF); Fluor (FLR); Galileo International (GLC); H&R Block (HRB); Lincoln National (LNC); Merrill Lynch (MER); Providian Financial (PVN); Schering-Plough (SGP)	AOL: 31.8 AXA: 11.4 COF: 6.6 FLR: 0.1 GLC: 6.9 HRB: 5 LNC: 7.5 SGP: -8.1 MER: 21 PVN: -16.4
Oct. 19	Ronny Kraft, CEO of Gotham Capital Management	"We still stand pat on the prediction we called for on Sept. 8, and still feel comfortable with the call and fundamentals that underlie it."	DJIA: 8.8 SPX: 11.7 COMP: 33.4
*Through close of trading Dec. 7. Source: Baseline.

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