InfoSpace insiders sell in down market
Company insiders sell about $7 million in stock at a time when share prices are way off a 52-week high, a move that analysts say could indicate a lack of faith in the company.
"I haven't seen sales of this magnitude among the other dot-com companies that have seen their stock prices cut," said Lon Gerber, research director for InsiderScores.com. "As an investor, I would be concerned that this signals that insiders aren't bullish on the company's prospects. I would rather see them increasing their holdings at these cheap prices."
Generally, when insiders sell at a low price, it can be perceived by investors and employees as a lack of faith in the prospects of the share price, at least in the short term.
InfoSpace's share price, which closed at $5.09 Thursday, is more than 90 percent off its 52-week high of $138.50. The company announced a management shakeup last month and forecast a 30 percent revenue drop for 2001.
The share price tumbled earlier this week, by nearly 14 percent, after executives announced a 21 percent cut in its workforce. InfoSpace is a technology platform company for wireless, broadband and wired companies.
There were nine individuals who sold shares in December, when they were employed by the company. Collectively, they sold nearly 700,000 shares ranging in price from $14.88 to $6.
Among the sellers were John Keister, former executive vice president of consumer service; Ellen Alben, former vice president of legal and business affairs; and Russell Horowitz, former chief operating officer. Those three have since left the company.
Alben sold 262,332 shares, or all of her remaining stake, for nearly $1.8 million. She did not return calls seeking comment. Horowitz sold 140,000 shares, or nearly 3 percent of his stake, for $1.4 million, while Keister sold 154,124 shares, or 36 percent of his stake, for $1.9 million, according to InsiderScores.com. Horowitz and Keister couldn't immediately be reached for comment.
Information on January sales will not be available until next week, Gerber said.
Joni Hanson, an InfoSpace spokeswoman, said the current market climate makes it harder to assess the motives behind insider sales.
"Five years ago, I would say it would be a sign of (bearishness). But it's a very different time we're in right now. A lot of people exercised options when the prices were really high and now they may have tax consequences they need to pay. I don't know why these people sold their stock, but it was probably to pay for personal things," she said.
"Considering the stock is down so significantly from its previous high, I wouldn't expect to see this level of participation of executives and directors," Gerber said. "I would expect little or no selling at depressed levels."