A lot of newsletters and services like to track insider buying, especialy shares that are bought on the open market. The obvious conclusion is that heavy insider buying means the stock must be undervalued or something is up.
The problem with these services is that many of them track the number of insiders who are buying, rather than the quality of the purchases.
AWGI’s stock has been standout this year (up 60%) but it has been running out of steam of late and their p/e is getting up there at 23.8.
For some reason (now I’m not the type to call it a conspiricy or yell “Personal Foul” or call for an investigation) the senior staff at Alderwoods has been (accidently, I’m sure) gaming these systems by (coincidently, I’m sure) buying small amounts of stock all on the same day!
The net effect of this is that a subsctriber to an insider buying service gets a report that says:WILSON, MARKSenior Vice President
LACEY, JOHN S.Director
SCULLY, RICHARD JSenior Vice President
NEEMAN, ELLENSenior Vice President
SHIPPER, AARON P.Senior Vice President
SLOAN, KENNETH A.Chief Financial Officer
HOUSTON, PAUL A.PresidentAll bought stock on the open market (WOW) on September 1st. If that isn’t enough to get you going, they did it again on October 3rd and again on November 2nd!!!
What you may not notice, unless you dig a bit, is that the grand total of these purchases on November 2nd, for example, was only 569 actual shares out of 3M shares held by insiders. Also, for every share purchased on the open market – these people all got 1/2 a share “privately” at no cost.
So, although I am sure that whatever Alderwoods is doing is completely on the up and up, I think this is a great example about how you need to dig into all of your data points before jumping to any conclusions.
I wouldn’t play AWGI either way, they have earnings on the 16th and, if they turn a profit this quarter, they are worth every penny as a dominant player in the death industry. If they lose their normal .30 per share (I don’t know why, must be a summer thing), without strong guidance, this stock may be a little ahead of itself.
This data is from http://finance.yahoo.com/q/it?s=AWGI , a very useful place to look when you are checking out a company.
