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Schmitt Industries, Inc. Message Board

  • roboklerk roboklerk Jan 10, 2013 8:46 AM Flag

    Jrn, Confused by Insider Buying Last Year

    When it is one insider buying, maybe he is wrong; maybe he has incorrectly guessed that the share price holds value. But when it is several insiders buying that is worth looking at. As a group, they probably have, or at least think they have, a pretty good idea of what the fair value of their company might be. Sure, they could all be wrong. Alternatively, they could all be trying to stabilize the share price and show their faith in the company to the outside world (of other shareholders). Or perhaps they had a time frame in mind of just how long they would let the whole Xact thing and company business in its entirety play out. Even though the financial results have been up and down, and consistent profitability has remain elusive, they probably have an idea of how they are regarded in the industry by other participants. Perhaps they have some feel as to how others might think of them in a Warren Buffet-like business value context. The public market is but one way to realize fair value. If they feel that the public market is ignoring that value, they may feel that is just a temporary dislocation that might be cured over time or that it might work itself out in another fashion.

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    • the public market is already discounting something as regards what it perceives fair value to be---at $2.96 per share the stock trades $0.56 per share below stated Book Value, that is about $1.7 million lower than stated shareholders' equity (including intangibles). Now where have I heard or read a number close to $1.7 million before when it comes to this company? I think I know what the market is discounting. I'm not terribly concerned, because if it is being discounted, it is already in the share price.

      • 1 Reply to roboklerk
      • ---roboklerk - I understand that completely. My point was simply about their lousy timing. Knowing full well their sales were not meeting expectations, they could have held off on their buys for much better prices. Since they didn't hold off on those buys, it's my guess they thought they had some pretty large size contracts(perhaps from the Xact product line) that they expected to close that never came to fruition.

 
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