Even more than usual,

James Cramer's

column has got me thinking. For one thing, I can't stop turning over his comments on

Nike

(NKE) - Get Report

-- or more specifically, his notion of the "value trap."

And don't get me wrong, I firmly believe Cramer has a point about what he calls the "siren song of cheap" stocks. In fact, for students of insider behavior, the value trap is a very real concern.

After all, as much as their high-profile sales put up the headlines, it is the insider's ability to draw attention to overlooked or poorly valued opportunities that really pumps stock prices. But how

do

you avoid the value trap?

By not stepping in the same trap twice, for starters. Unfortunately, the insider's knack for spotting improving fundamentals when the herd is otherwise distracted -- that's right, the very trait that gives him his edge -- all but guarantees he will be early in calling a bottom.

And this is true either for a neglected stock or an out-of-favor group. If the stock continues to drift (and believe me, it will) and the insiders continue to buy, well what then? You thought you had the makings of a trap before!

But surely it can't always be so, right?

Admittedly,

my suggestion back in November that insider accumulation at

Centex

(CTX)

might herald a turnaround for the building stocks wasn't one of my proudest moments.

In fact, having been pummeled throughout 1999, the homebuilders already have given back another 10% this year. And with the stock trading perilously close to book value, don't think it hasn't occurred to me just how much Centex is beginning to shape up as a value trap.

Unlike Nike, however, business is absolutely booming for Centex. In fact, the company recently reported another record quarter, once more meeting the

First Call/Thomson Financial

consensus estimates, despite a significant falloff in financial-services income.

And Centex isn't the only one building houses. The more than 900,000 single-family homes sold in 1999 marked an increase of 2% over 1998, which itself was a record year. This despite a series of

Fed

rate hikes. Strange as it sounds, some insist that the numbers are simply too good -- that a soft landing is what the doctor ordered. In other words, it is the fear that things can't possibly get better that has investors at bay.

When I spoke with Centex CFO David Quinn back in November, he said nothing about a "trap." He did mention value, however, characterizing his colleagues' motivation for buying as "sound judgment."

Now, Quinn himself has put his money on the line, laying down more than $2.4 million to exercise nonqualified stock options to acquire 220,000 shares. This alone exceeds the 99,000 shares purchased by Centex insiders last fall. And there's more.

All told, since Dec. 8, six Centex insiders exercised options to acquire more than 596,100 shares. Among those exercising nonqualified options were Laurence Hirsch, chairman and CEO of Centex, and Timothy Eller, chairman and CEO of

Centex Homes

.

Contrary to what one might think, the fact that the recent accumulation involved options exercises (as opposed to the open-market purchases made in late 1999) is a good thing. For one thing, it decreases the likelihood that the activity was for show.

After all, exercises make for much less of a splash than open-market buys. For another thing, tax consequences favor the exercise of nonqualified stock options when the stock is trading at the lowest-possible market price.

The moral here is not that Centex is a "can't miss" proposition. Nor even that persistent insider accumulation in the face of declining share prices is always a dead giveaway of an undervalued stock (though I hope you will give this latter idea some serious consideration).

Perhaps it is simply that just as any stock or group that has fallen out of investor favor may be a potential value trap, it also may

not

be a trap.

How do you tell the difference? Hard to say. It may be worth taking a look at the insiders -- and certainly, as Cramer says, you'd better take a hard look at the fundamentals. As for Centex, it may never be a red-hot stock, but investor sentiment has been known to do some wonderful things for overlooked gems when it shifts direction.

On a related note, what has become of the retail apparel insiders? This is another group that's been ignored by investors. Thus far, even at the most neglected retailers, insiders have been slow to jump to their stocks' defense.

As a matter of fact, with very few exceptions, they've recently been much more inclined to sell into weak charts than to buy. Keep in mind, with the 10th-of-the-month insider-filing deadline approaching, this could change quickly as the new data roll in.

But, so far, I'm not impressed. Next week, with a new month's data in hand, I'll take a closer look at this enigmatic group.

Bob Gabele has been tracking and analyzing insider trading since 1978, most recently for First Call/Thomson Financial. This column is not meant as investment advice; it is instead meant to provide insight into the methods of insider trading. At time of publication, Gabele held no position in any of the companies discussed in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Gabele appreciates your feedback at

rgabele@thestreet.com.