General Instrument Insiders Sure Seem Anxious to Sell
Fried-Day:
Sell, baby, SELL!:
That seems to be what insiders at
General Instrument
(GIC) - Get Global Industrial Company Report
were saying in recent months as that stock zoomed. Readers of this column will recall that Gen Inst, which makes set-top cable boxes, was mentioned
here back in June as a likely benefactor of
AT&T's
purchase of
TCI
, which was Gen Inst's biggest customer. At the time it was at 26. Now it's trading at 41 7/8. "It seems like the planets are lining up for the company," says
Bob Gabele
of
First Call/InvestNet
TheStreet Recommends
, who also pens a new
column at
TheStreet.com
.
So, why, he wonders, are so many insiders selling so much of their Gen Inst stock so quickly? The company doesn't have an explanation (at least not for you-know-who). But numbers are numbers, and the numbers show that, in April, a dozen Gen Inst insiders sold 373,565 shares at prices ranging from 28 to 37 3/4 per share. Quite a few of the sales represented 20% to 40% of the sellers' holdings.
All shares were options-related, which often makes them irrelevant to trading trackers like Gabele. But these are options that don't expire for several years, so they are significant. (Why sell at these prices today if you think you can sell at higher prices tomorrow?)
What's more, the sales were by execs with the SVP title, which means they know just what's going on. "When I see a number of insiders reducing positions significantly all at once, that's an anatomy that catches my attention," Gabele says.
One plugged-in Gen Inst investor said he doesn't have a clue why there has been so much selling. "The wind's at their back," he says. He also cites the company's ownership in several other companies, including
WorldGate
(WGAT)
and
Next Level
, which is believed to be worth as much as $10 per share. "The major risk I see them having is execution," this Gen Inst fan says. "They have to be able to get boxes out to meet demand."
Assuming demand is as strong as they expect it to be.
Not a gusher:
So, a month ago this column talked to the
Bayou Fund's
Jim Marquez, a private hedge fund manager, who was said that one of his favorite cheap energy stocks was
PennzEnergy
(PZE)
. PennzEn was the exploration and production side of the old
Pennzoil
before another part of Pennzoil merged with
Quaker State Oil
in December to form
Pennzoil-Quaker State
(PZL)
.
Before the split,
Union Pacific Resources Group
undefined
had offered 84 per share in cash to buy Pennzoil. Pennzoil just said no and the deal fell apart, as did the stocks of both companies. They now trade for a combined 29, or about 14 1/2 for both. J.L. Pate, chairman of both companies, has said several times that before he retires he will deliver 84 per share to investors.
And Marquez, in our month-ago
conversation, said he didn't think it was beyond the realm of possibility. He thought Union Pacific Resources Group, flush with more than $1 billion in cash, wasn't entirely out of the picture. But if it didn't show up, he figured somebody else surely would, which is just what
Devon Energy
(DVN) - Get Devon Energy Corporation Report
did yesterday when it agreed to buy PennzEn for $2.4 billion in stock and assumed debt.
Ridiculously low, some investors claim, especially when the company walked away from so much more money so recently.
Now the question is whether somebody else, even Union Pacific, will show up with a counter-bid. PennzEn's stock, which actually fell on the news, is 20% higher than where it was when Marquez and I first spoke, but it's still far below where it would need to be for Pate to deliver on his promise.
Doesn't look like anybody's betting on a higher bid. Or maybe it's just that arbs, once burned by Pennzoil, are simply avoiding the deal. (I tried to get a comment from Pate regarding the status of the 84 payday, but so far no comment.)
Bearly bullish:
Whenever one of this column's short-selling sources gives the thumbs-up on a stock it's worth a word. Shorts, after all, are merely value investors in reverse. This short's long:
Brookstone
(BKST)
, a.k.a. the poor man's
Sharper Image
(SHRP)
. "At 10-times earnings it's growing at 25% per year, with an Internet kicker," this short says. "Internet sales are still small, but up five times last year's level. They'll also be making a big print media push, including being featured by
IBM
(IBM) - Get International Business Machines Corporation Report
as an e-commerce partner." If not, at least you know the balance sheet is clean!
So long, CNBC:
No, they didn't change the time. The reason early risers haven't seen this columnist's mug lately on
CNBC's
"Today's Biz," where I was a frequent guest, is because
TheStreet.com
apparently is now deemed a direct competitor.
CNBC
is starting its own Web site.
TheStreet.com
is doing a show with
Fox
. Not a good mix, according to their powers that be. Hey, you can't fire me; I quit!
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
herb@thestreet.com. Greenberg also writes a monthly column for Fortune. As originally published, this story contained an error. Please see
Corrections and Clarifications.
