I realize Jim Cramer is taking a lot of heat lately in the press and I will start by saying I am not here to pile on. That said, I want to add to some of the comments he aired on Tuesday, April 7 about Research in Motion (RIMM).
Jim had a great segment discussing his views on RIMM. He went on and on about the fundamentals of the company and that it was well positioned going forwarded.
He also mentioned that his ‘technical guy’ believed the technicals (charts) were looking very good and that RIMM had formed a beautiful W pattern and has broken out recently. In the last couple of days he mentioned that the stock had pulled back and he believed it to be a good buy at this time in the low 60 dollar range.
All of this sounds great and I admit the chart looks good, but…
What did Cramer not tell you that you should know? The simple fact that company insiders are selling. I always hate to see insiders selling when I am thinking of buying. The question we should always ask is: why should I be buying if the insiders are selling?
Yes, there can be numerous reasons for corporate insiders, officers and directors, to be selling, i.e., to raise money to pay taxes, kids college expenses, the possibility of poor news coming out of the company in the near future, etc.
Just one insider selling would not necessarily make me nervous, but when we have several insiders selling, well, investors should pay attention.
In the case of RIMM, there have been a total of 7 insiders selling consistently since October 2008 at prices between $72 to as low as $42 - totaling around $32 million. Only one insider bought in October 2008. He must not have gotten the memo!
To get a little more current, over the last 90 days there were 5 insiders selling (no buys) for a total of around $13 million. The ‘good news’ is that there have been no sells since February 19th and no selling into the recent rally, at least, at last reporting.
Research in Motion is actually a Canadian company and their reporting requirements are in Canada, not the U.S., so perhaps this was under Cramer’s radar screen for analysis.
I’ll leave the conclusion up to each investor, but you should always be aware of what the corporate insiders are doing, i.e., buying, selling or nothing before you enter your trades.
They could be selling to you... and that’s something all investors should consider.
Disclosure: No Position
