Ticker : CNAM
Name : China Armco Metals, Inc.
Filer : Yao Kexuan
Title : Chief Executive Officer
Document Type : 4
Date : 2010-06-30
Action : Options Exercised
Transaction Shares : 400,000
Current Market Value : $2,000,000
Click Below to view the Transaction Document
Well, for all the negativities of past months, I have to agree that this filing was a piece of positive evidence.
Com'n, if this were a US company, and the CEO bought/exercised that big a position, the stock would have really jumped up.
Unfortunately, the CEO is not a stock trader. Yes he could have bought the shares in the open market while let the options expire. It would be real boost to share price, just imagine what could have been.
Anyway, with the CEO/owner added new shares at that price, you have to think twice about shorting/selling it here.
I was thinking to short the opening pop, but after reading the filing I didn't.
Instead, I'm thinking to buy some as certain point. Who knows for sure with this crazy penny stock?
Wonder if this will put a floor on the stock price? Guess that depends on wheather the market changes course? The futures look bad at the present, but that could change by the open? Market is a total gamble at times, and will fool even the best traders.
Interesting news. So the CEO is willing to blow close to 800k to bump the stock price up and/or feels that the company needs the extra cash. Actually, since he owns half the company, half of that is back to himself in a sense. if the buy pops the share price up $2 it would seem worth the investment for him. On the surface, this would seem a plus for going long, but this is all a bit peculiar to me.
I may miss a good upswing, but I'm hesitant until I see confirmed business. I'll be watching closely Tuesday.
It is a good sign. According to the Form 4, the option right was expiring on June 30th, 2010. So he either paid the $5 or lost the right to buy the 400,000 shares. You could ask why didn't he let the option expire and buy 400K shares cheaper on the open market? Because there are only certain windows of time an insider can buy and, right before an earnings report, is a "closed" window. He must of figured he couldn't do better on the open market if he waited later to when there is an "open" window. Gives insight into the companies future when he's willing to pay more now rather than wait!!
I have a different take on this. The CEO could have bought shares in the open market at a much cheaper price but chose to exercise out of the money options.
Looking at where the money goes from the two alternatives: 1) If the CEO bought shares on the open market, the purchase money goes to the seller of the stock, e.g. the company doesn't see a dime of it: 2) By exercising the options at $5, the company issues 400,000 shares and gets $2 million in cash.
So my take on it is the company is cash poor as they have a lot of capital tied up in distribution deals and scrap metal (accounts receivable and inventory).
If so, this is great for a nummber of reasons: 1) the company has a lot of business currently...It takes money to make money; 2) the CEO wouldn't buy stock at above market prices unless he thought he could get a nice return on that investment; 3) This transaction raises the book value of CNAM; 4) CNAM now has more liquidity.
Good to see indeed! He must be very liquid to buy at 5 when he can buy at 3.00 At least he's putting his money into the company vs into his own account. I hope he starts understanding that we need to spend a few bucks on a new investor relations co, CDII is being paid 80,000 shares this year. First qr take down was 20K, average take 5.00 = 100,000. They probably will hold until we move above that level again. But the minimum to them for their services will be 400,000. Our chairman must know, we can hire a must more reputable IR/PR firm for that in New York where it matters...And have stock support due to client support in the investment community. This is just so affordable and instead of losing 40 million in market cap, we'll bring in the next tranche of 10 million at 7.50 per share for already issued warrants in 4 months.. this was already baked in for the funds that paid 6.50 per share. But allowing this stock to be cut in half, do you think they'll buy in with CDII and Rodman now?? Unless of course the stock triples from here and it's a no brainer...This stock can do this, but we need proper support and business data...on a timely basis...I ask again to Richard and Gary at China Direct...what's the status of the new scrap yard. How much has been shipped to date. What's the average price per metric ton for the HMS 1 & 2 we are producing, what's 2nd qr and 3 rd qr estimated revenue, where's sales info on the commodity business that is half of this yrs forecast?? Nothing has been put out since Dec 2nd!! Ridiculous, have we done nothing in this vital part of the business...This is simply the role of Investor relations companies..putting out information for the shareholders and markets...it's called stock support...Do you think money managers in New York call Deerfield Florida for advice?? It's not Boca I can tell you that...Lets see something vs the vacuum of silence that has destroyed our value.
Absolutely. They need a better IR and a better auditor. ASAP
Their current auditor is a 2-3 man company in New Jersey (that was marked up by PCAOB recently with several deficiencies) handling the books of a NASDAQ company with potential annual revenues of hundreds of millions of USD? That's ridiculous.
it means he bought it.
An option (in this case) gives you the right to BUY stock shares at a predetermined price, usually much lower than market prices. But in this case the CEO paid $5 per share out of his pocket (much higher than curent market price) b/c he thinks the share would be worth much more eventually (unless he's a complete idiot which I dont think). That's a very bullish message in itself. In doing so, he also helps his company with cash on hands, say b/c they need to make a big payment for some order or equipment. Otherwise they would have to tap into their credit lines which creates a liability and reduce the available funds for future expenses. This is the second time the CEO exercizes an option to buy shares at $5/sh within the past 2 months. The first time was in May I believe when he spent $5MM cash to buy 1M shares via another option.
Note also that the steel plant owner who co-signed the loans recently also agreed to get paid with 500K shares at $3.9/sh. So another insider buying shares of CNAM at prices much higher than current market price. Are they both stupid ? Hmm......