Our topic for today is insider trading, or more specifically, why do stock price changes sometimes precede market-moving company news?
Let’s take Grainger (GWW), a large, well-managed industrial parts distributor whose price skyrocketed in 2013 well past the general stock market’s uptick.
Their reported insider sales (SEC requirement) appear to be routine cashing in of options. Most recent sale was on Jan 14. So probably not insider trading, though maybe an alert secretary, well-educated janitor, or careful fund manager might have have suspected an earnings miss.
On Jan. 21, the DJI and GWW both started a downward leg. By the end of the week, the Dow was down around a little more than 3 percent in one month. Yet, GWW was down about 6.5 percent in the same period.
Before the opening bell on Friday, Jan. 24, GWW released their earnings results: “ W.W. Grainger misses by $0.03, reports revs in-line; lowers FY14 guidance, largely on weak CAD, divestitures.” Did anybody know, or just suspect?
Could the Jan. 21 article, “Is It Time to Buy Industrial Supply Companies?“ published by the Motley Fool have had something to do with the big drop? Maybe, but the article was talking about Fastenal and only mentioned GWW in passing.
What do you think?
Last year was a difficult one for investors in industrial supply company Fastenal (NASDAQ: FAST ) . The stock ended the year flat, and managed to underperform sector peers such as Grainger (NYSE: GWW ) and MSC Industrial (NYSE: MSM ) . Furthermore, the Institute for Supply Management, or ISM, manufacturing data got a lot stronger in the second half, but Fastenal’s performance did not. What’s going on? Can the market expect more from the company this year?
BTW, Motley Fool columns have been reliable and empty of hype as far as we have seen. They offer a Supernova account for “only” $1,499 a year. There’s also a great five-year offer.
Now that is too much for Cheapskate IFO, who is no longer looking for investments, but just keeping an eye on what she already has, but a subscription could be well worth the investment for some.
We don’t recommend stocks or newsletters, but we will say we would never consider spending a cent on Seeking Alpha (a website that also comments on financial matters including individual stocks) having read a number of very iffy articles.
“Iffy” is like “woo-woo” or “cat’s meow”- terms of art known and understood only by those who use them. You know who you are.