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OklaBoston (68.65)

ALIM

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October 04, 2012 – Comments (9)

This, like my last post, is essentially a pitch for an ineligible stock.

 ALIM (Alimera Sciences) went public in April, 2010 at  $11.00 It has gone through the inevitable bad phase of the IPO process and was below $2 for a while. It now looks on the charts to be bottoming out and finviz.com tells me that insiders have been accumulating shares for the last 6 months.

 Will it get back above it's IPO price?  It might. The insider activity says to me hat it's time to cover shorts and/or end "Underperform" picks in spite of the lousy TTM return numbers.

9 Comments – Post Your Own

#1) On October 06, 2012 at 10:16 AM, TSIF (99.96) wrote:

Your fixation on insider ownership and applying it to biopharms, reverse shell mergers, and other companies with no products and minimal insider owner equity continues to detract your time and energy from other more fundamental valuation metrics.

Insider ownership on these type of companies has little meaning when there is no value in the company, no institutional ownership that has vetted the merits of the company, etc.

In this case, it's even worse. As a biopharm you're graded on your chances to bring a product through trials/regulation. A long road. Even insiders are dumping.

Your FINVIZ is not distinguishing between "gifted" or nonmarket shares.  It is skimming low cap, no cap, reverse shell companies where insider holdings were not earned.  It's also skimming low float/volume companies where insiders can't sell large chunks even if they want to because supply demand would crush the share price.

Good luck. I believe your energy would be better spent on companies with larger market caps, "decent fundamentals", some institutional holdings.

Good luck.

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#2) On October 09, 2012 at 11:49 PM, OklaBoston (68.65) wrote:

Insiders understand those valuation metrics better than non-insiders. So they know when "the crowd" is misinterpreting those metrics or the chances of the company performing better in the future than it has in the past. That's why I pay so much attention to insider ownership and it's changes. Paying too much attention to TTM numbers, as most metrics do, can cause one to miss out on bargains.

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#3) On October 10, 2012 at 11:42 AM, TSIF (99.96) wrote:

I understand your bias and what you are trying to do.  Insider ownership has value. 

 You're using the metric on companies where there is "NO OTHER ownership" besides insiders and retail investors. Against companies that have NO TTM metrics.  AND you are using it on companies that have had NO INSIDER buys despite what FINVIZ is telling you.  A few hundred shares of stock option when you have millions is not insider activity.

I suggest that you reread my comments on this blog and your LIVE pitch. I believe if you break it down you will find when/how to look at insider ownership.  I'd also suggest you read up on stock options at non-open market versus meaningful open market buys. I think you can do well if you use FINVIZ as a reference point for WHAT to look at and THEN apply the TTM and other metrics.


Good luck.  

 

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#4) On October 10, 2012 at 12:19 PM, OklaBoston (68.65) wrote:

It's possible I have unintentionally given the impression that I ignore TTM metrics totally in making my picks. I don't go that far, but have a strong belief that most Fools pay TOO MUCH attention to them. Finding companies that will perform better in the future than they have in the past has to be almost impossible doing that.

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#5) On October 10, 2012 at 1:01 PM, TSIF (99.96) wrote:

Oklaboston, your blog on ALIM and your pitch/responses on LIVE clearly show that you are not applying the insider purchases to the right companies.  ALIM and LIVE have no TTM metrics and NO INSIDER purchases.  FINVIZ needs screened.

Insider purchases need quantified.  Gettting 400 stock option for free and keeping them when you have 400,000 more is meaningless.  Having no volume on your equity means you can't sell what you have.

Many of these smaller companies exist so insiders can have jobs that pay quarter million dollar salaries, regardless of stock. Selling their stock would create a zero dollar company and no ability to sell shares at market to fund your salary.

A good balance of technical and fundamental analysis can help you find companies that will outperform.  Technology changes, biopharm changes, new products, innovation, proper investment of your gains, etc. 

Good luck.

 

 

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#6) On October 10, 2012 at 11:05 PM, OklaBoston (68.65) wrote:

No insider open market buys, but exercises of company granted options is something no other site I know of includes in it's totals. Which is one of the things I like about it.

 Also, it's precisely underpublicized small cap stocks that insiders are likely to understand better than brokerage analysts or "The Crowd". 

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#7) On October 10, 2012 at 11:09 PM, OklaBoston (68.65) wrote:

As far as technical analysis goes, I've looked at many, many variations of it and found none that predicts future performance as well as insider action. I'll probably never give up on it totally, but my faith in it is much weaker than it used to be.

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#8) On October 11, 2012 at 12:21 PM, TSIF (99.96) wrote:

Any metric has limitations on what it can do and when it can be used.  Insider ownership has value (in my opinion), when the market cap and interest extends to other investors who can help vet it,  when the buy/sells are open market,  when the insiders "earned" shares, not gifted, when the company has other financial metrics, even if they are currently bad, the company must have a history of real sells OR real marekt potential.   ALIM and LIVE do not meet any of these.  Don't give up on insider ownership, but learn when it has value.  Even then don't place too much value on it.   Especially insider sells.  Insiders should diversify their own holdings as each of us needs to do.  Knowing when they are being prudent and when they are running, giving you a tip, is not easy.  Multiple insiders selling can be the tell in those cases.

TA has benefits in short term "trading", generally not long term investing.  It can also identify companies that might be good in the long run, but needs scrubbed against fundamentals before going long.

Fundamentals are where you want to be for the long run. Using temporary market  variations or a temporary company issue that can be 'fixed'. 

Adding metrics to your arsenal is how you build confidence or identify equities to research further. Metrics need to work together and you need a plan for entry and a plan for exit.

Easily said, not always easy to do, hence practice and the question for new ways to use the metrics and consistancy is what CAPS can help with.


Good luck. 

 

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#9) On October 11, 2012 at 11:44 PM, OklaBoston (68.65) wrote:

What I'm really looking for most of the time are companies about which both long-termers and short-termers can get enthusiastic.

 Insiders tend to be long-termers, analysts and fund managers short-termers, though most will deny it. When a short-term site like Zacks and long-term sites like Morningstar and Motley all like a stock is when my interest gets highest.

 

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