Director Ted Simon bought 1,000 shares yesterday by exercising options, 500 at 17.20 and 500 at 14.95.
Of course, the difference between the strike price and fair market value at time of purchase (over 36) is taxable compensation on exercise, but basis = fair market value and holding period for long gains starts on exercise date.
Here's the telling part:
These options were first exercisable in 7/09 and 7/10, respectively. So the first pondering is why not exercised sooner when price was lower, thus causing less ordinary income on exercise?
The whopper is these options did not expire until 7/2018 and 7/2019, respectively. So the whopper question is why exercise now and cause all this phantom ordinary income when so many years were left on the options?
There are a few rational answers, but the most probable is Simon thinks the price is going higher, so bite the bullet now on ordinary income instead of waiting for a much higher price causing a bigger compensation hit. Plus, the clock starts now for long term capital gain. Plus now he collects a 7% dividend yield, most of which is a tax free reduction of basis which causes much later a bigger long term capital gain.
Who knows what the tax system will look like in 2018 and 2019? Bite the bullet when you know what the tax hit will be and from then on have control over the next taxable event (sale of the stock).
Ya gotta learn to read the tea leaves for the art portion of stock investing. These tea leaves are very bullish on sui, imo.
Weakness this morning is what may be the last chance for an ex-div yield of 7% or better. Engage with the peanut gallery as long as the price is below 36.64 for 7%, ex-div.
Director Weiss on 4/11 exercised on multiple options covering 2,000 shares. The earliest expiration date on the options was 12/31/11 and the latest, 7/29/19.
There are only a few reasons for early excecise of in the money options, the most likely of which (imo) is an expectation of a price increase. Thus, exercise before the price increase reduces the amount of compensation to be recognized and it starts the holding period for long gains on the stock, not to mention collecting a nice, mostly tax deferred dividend which converts ordinary income into a long gain.
First Somon, now Weiss. I'm tellin ya, these directors are sending a clear message. Ya just hafta be smart enough to listen. Spelling doesn't count. Paying attention to the insider signals does.