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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • Monster Energy Stock Price Plummets, Insider Trades Reported 0 comments
    Oct 23, 2012 7:31 PM | about stocks: MNST

    Insider Cow

    Profit From Insider Trading
    Insider behavior matters because research based on real-time signals has shown that a properly modeled picture of insider actions can provide the most accurate reflection of the prospects for the company, industry, economic sector, or even the stock market in general, going forward. This makes perfect sense from an intuitive perspective. Corporate insiders possess all the necessary skills and characteristics that one could use to describe the "successful" investor. These include: A deep knowledge and understanding of the company and/or industry; A demonstrated ability to produce success; The training necessary to understand risk and to control it; The wherewithal (capital) to take advantage of opportunity when it presents itself and finally; A tendency to go against the crowd. In general, insider buys are more useful. Since insiders have exclusive information on the company performance, if they are risking their own money on the stock, usually they should have good reasons, especially when several insiders buy the stock at the same time.

    October 23, 2012 - Monster Energy Stock Price Plummets, Insider Trades Reported - Review Entire Article Below

    What Is Legal and Illegal Insider Trading?

    Insider trading can commonly mean two things. Illegal and legal insider trading. In the simplest terms its the buying or selling of a security by someone who has access to material nonpublic information about the security.

    Insider trading can either be legal or illegal. Its illegal when information about a company is not public and any trading done with its stock is unfair to other investors and traders who don't know or have access to the information. So illegal insider trading normally happens when others are informed of such non-public information. Company directors and board members as well as brokers and close relatives can be found guilty of insider trading.

    Legal insider trading is when company information has been made public, then the company insider does not have an advantage over other investors and traders. Part of legal insider trading practices is the filing of all insider transactions with the Federal Securities Exchange Commission. The potential exists for non-insiders to profit from insider buying and selling is to analyze company insiders buy sell transaction reports. If an insider is buying or selling especially in large amounts it could be an indication the companies earnings performance and subsequent stock price could be affected providing reqular investors and traders to profit from.

    Guru Focus

    Stock Picks of Guru Investors
    GuruFocus is dedicated to value investing. As employed by Warren Buffett, the greatest investor of all time, value investing is the only winning strategy for the long term. GuruFocus hosts numerous value screeners and research tools, and regularly publishes articles about value investing strategies and ideas. GuruFocus also publishes three newsletters: Monthly Ben Graham Net-Net, Buffett-Munger Best Bargains and Microcap Magic Formula Stocks.

    Why Track Insiders Buying and Selling Their Own Stock?

    Insider behavior matters because research based on real-time signals has shown that a properly modeled picture of insider actions can provide the most accurate reflection of the prospects for the company, industry, economic sector, or even the stock market in general, going forward.

    This makes perfect sense from an intuitive perspective. Corporate insiders possess all the necessary skills and characteristics that one could use to describe the "successful" investor. These include: A deep knowledge and understanding of the company and/or industry; A demonstrated ability to produce success; The training necessary to understand risk and to control it; The wherewithal (capital) to take advantage of opportunity when it presents itself and finally; A tendency to go against the crowd.

    Further, insider buys are especially useful. Since insiders have exclusive information on the company performance, if they are risking their own money on the stock, usually they should have good reasons, especially when several insiders buy the stock at the same time.

    October 23, 2012 - Monster Energy Stock Price Plummets, Insider Trades Reported by GuruFocus

    As news circulated about five cases of deaths potentially linked to Monster Beverage Corp. (NASDAQ:MNST), currently being investigated by the US Food and Drug Administration, Monster shares have dropped more than 11 percent today.

    The stock is currently trading at $40.85, almost $20 lower from a week ago.

    GuruFocus Real Time Insider Trades indicate that the latest recorded insider activity was a third quarter purchase by Monster director, Sydney Selati, of a total of 88 shares, bringing her total holding of the company up to 18,400; this transaction makes up one of only two purchases in its recorded insider trading history dating back to 2007.

    The rest of the recorded Monster trading activity has been sells.

    Most of the sells that permeate prior fiscal quarters were done by Monster chairman and CEO Rodney Sacks, and Monster vice chairman and president, Hilton Schlosberg, selling as much as three times in one quarter. Despite the frequent reductions to their shareholding, both Sacks and Schlosberg proceed to own more than 22 million shares to date.

    It has been four months since the last batch of insider sells have been recorded; the latest sells comprised of Selati's $709,000 transaction, Senior Vice President Kelly Thomas' $1.2 million transaction, and Sacks' and Schlosberg's $32.4 million transaction each.

    Although selling activity has died down for now, SEC filings indicate that several insiders have taken part in exercising their stock options recently.

    Schlosberg, Sacks, Thomas and Monster Beverage Division President, Mark Hall, have all exercised their stock option in September alone.

    Monster Beverage stocks have been on a downward trend since reaching its one-year peak on June 18, steadily sloping negatively after that, with its sharpest drop between Aug, 7-13 at about $15.

    Several Gurus have reduced their shares of Monster since the start of the year.

    Jean-Marie Eveillard of First Eagle Investment Management LLC and Columbia Wagner both reduced a quarter or more of its shares of Monster in the second quarter. Jim Simons of Renaissance Technologies LLC reduced his shareholding down 50 percent in the first quarter.

    The following Gurus have sold out their Monster shares completely: Steven Cohen of SAC Capital Advisors, John Burbank of Passport Capital, Jeremy Grantham of GMO LLC and Bruce Kovner of Caxton Associates.

    Paul Tudor Jones also sold out of his shares of Monster in the first quarter, after keeping it on his portfolio since 2009. He, however, bought 5,700 shares back in the end of the second quarter.

    Monster has received much scrutiny after the mother of a 14-year-old girl who died last December, has filed a wrongful death suit against the energy beverage titan, alleging that the caffeine content in Monster Energy caused her daughter's cardiac arrest and death.

    The lawsuit was filed through the Superior Court of California, Riveside County, which listed seven different counts of complaints against the corporation including failure to appropriately list its caffeine content on its labeling and fraud due to concealment, suppression or omission of material facts, in this case, failure to warn about the risks that come with consuming its energy drinks.

    About a week before her death, Maryland-native Anais Fournier went to a local mall for two consecutive days where she consumed a 24-oz. Monster Energy drink both times, according to the court filing.

    The lawsuit triggered FDA to hold an investigation, as well as a confirmation that there have been five cases reported that suggest people have died due to energy drinks.

    In its second quarter financial report, Monster Beverage reported a 28.7 percent increase in gross sales compared to the same period last year. Its net income also increased 31 percent to $0.59 per diluted share compared to last year's $0.45 per diluted share.

    "We are continuing to expand into new international markets with retail sales of Monster Energy commencing in Ecuador, Hong Kong, Japan, Macau and Slovenie in the second quarter," CEO Sacks said in a press release posted in August. "We are planning launches in additional international markets later this year and in 2013."

    Monster Beverage Corp. has a market cap of $9.41 billion, a P/E (ttm) ratio of 28.1, a P/S ratio of 5.5 and a P/B ratio of 28.1. Besides a Financial Strength rank of 9 out of 10 and a Profitability and Growth rank of 8 out of 10, it also has a Business Predictability rank of 3 out of 5 stars.

    About GuruFocus Real Time Insider Data

    If you would like to view the most recent insider buys, visit GuruFocus Real Time Insider Buys. You can also view the most recent insider sells at GuruFocus Real Time Insider Sells.

    In 2010, GuruFocus held a three-part Insider Research series examining the relevance of Insider trading activity within companies. The research revealed many interesting facts about incorporating the gathered information to personal investment strategies, as it contributed to the development in the Insider tracking and alert tools offered on GuruFocus.

    Stocks: MNST
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