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Eagle Bulk Shipping, Inc. Message Board

  • tonmiletrader tonmiletrader Mar 24, 2013 10:16 PM Flag

    egle - lack of insider buying

    I had tried to respond to an earlier post on “lack of insider buying” but was unable to. So I start a new thread.

    “lack of insider buying” is a too-polite way of saying “insiders were selling”. In december, soph and other sr management sold at 1.47. while they cant control the exact price their shares were sold at, the fact that they were selling at all tells a tale. The question being – if you were on a ship, any ship – and you saw the captain and crew in the life boat, wearing life preservers – lowering themselves to the water without telling anyone – would you maintain confidence in the immediate-term fate of the ship.

    There are many trying to frontrun a dry bulk turnaround. Within the right names and right balance sheets – this might be a decent concept. nm and dsx come to mind. Both were criticized years back for not being more aggressive (lord cramer very much criticized simeon palios for not projecting enough optimism circa ’09-10), and now both are seeing the rewards of understanding shipping cycles. Lower tier names are a different matter. One of these lower tier names (not egle) is said to be seeking a bankruptcy venue in the US. Yet retailers have been buying that same name over the past few days or more.

    Bottom line to the egle trade is this. If you are buying – you are saying you are smarter than senior management. Recall – they sold at 1.47. and if you are smarter than senior management, what exactly are you buying? I am accepting the usual hate mail at the blog. Email address is there. I am easy to find. Not out of shock top yet. Mike

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    • you fail to either include or evaluate why they "sold". simply to pay taxes on the shares they receive on option strikes. any wise holder of stock issues understands the concept of portfolio exposure. if I was management I surely wouldn't use my cash flow in lieu of shares that are readily available.

      • 1 Reply to up1.down2
      • Management chooses to sell stock to pay taxes instead of shares because they realize their return on cash is better then their return on holding Eagle stock.

        Nobody sells an asset that has a reasonable chance of appreciating by 20,30,40,50,or 100% to pay taxes versus using cash. Especially an insider who knows what's going on better then anyone else in the company. A review of Eagle's executive compensation shows that Soph has tons of cash on hand versus his current equity in Eagle, so its not a diversification issue. Besides, Eagle's CEO is already well diversified. He's currently being paid to run another dry bulk shipping company for the PE investors who started Eagle. Remember those guys? The ones who took all the FCF and paid it as dividends and then sold ALL of their holdings in Eagle so they could start a new shipping company that competes with Eagle!

 
EGLE
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