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With over 20 years of professional experience, Mark Gomes is among the world's most experienced technology stock analysts. During his time as a contributor to Seeking Alpha, over 50% of his official picks were either acquired or tripled in value. Currently, Mr. Gomes is the CEO of Pipeline Data,... More
My company:
PTT Research & Pipeline Data, LLC
My blog:
Poised To Triple
My book:
Faster Than Forty
  • Glu Insider Transactions -- Why You Should BUY 22 comments
    Dec 28, 2013 3:15 PM | about stocks: GLUU

    Investors are already pelting me with questions about the recent insider selling in GLUU shares. No offense, but 10b5-1 insider selling is almost never a reason to get frightened about a stock. In fact, if the fundamental story looks good, 105b-1 selling should be ignored…100% of the time.

    100%.

    If you go to InsiderCow, enter a ticker symbol to see the insider trading activity for the corresponding company. On the far right of each company's page, there's a column called "Details". If you click the "View" button for any transaction, the website will display the SEC document that was filed to disclose the transaction (a Form 4).

    Box 3 of the each Form 4 shows an alphabetical transaction code (a code key can be found on Wikipedia), along with a numeric code in parenthesis denoting the reason for the transaction (the numeric key code can be found at the bottom of the Form 4. If the code is (1), it means that the transaction was completed under Rule 10b5-1 of the Securities Exchange Act of 1934.

    According to Investopedia, a 10b5-1 plan enables "major holders to sell a predetermined number of shares at a predetermined time. 10b5-1 plans are used by many corporate executives in an attempt to avoid accusations of insider trading." In other words, it is basically an automatic wealth diversification program which has nothing to do with whether the company is doing well or not…a non-event.

    As Peter Lynch (one of my early Wall Street idols) once said, "There are many reasons insiders sell, but only one reason insiders buy." In other words, insider purchases are usually bullish, but in a vacuum, insider sells are meaningless data points.

    If anything, if the stock falls on such news, it's almost always a buying opportunity. That is the case here.

    In other words, the 10b5-1 selling has zero impact on my thesis or thinking on GLUU. Investors need to get used to the fact that my articles don't have an expiration date, nor does my thinking change with each silly and minor data point. Deer Hunter falling 2 spots in the rankings doesn't change the ONE most important thing about GLUU -- its new monetization platform is a major money maker.

    Thus, what I have written about GLUU will be how I feel NO MATTER WHAT HAPPENS, barring ONE exception -- if the monetization platform starts to fail. So far, the opposite has been true. The platform is performing better than I imagined.

    So, do yourselves a big favor and calm down. :)

    I only donate a certain number of hours to Seeking Alpha each week. Having to write articles like this takes time away from finding a new triple. Thus, when your confidence in one of my picks feels shaken, go back and read Tripling Your Money: Don't Get Shaken Out. Alternatively, when insiders sell, follow the instructions I provided above and confirm for yourself that the selling is just a harmless 105b-1 program at work.

    ...and yes, >sigh< if you need to hear it again:

    Shares of GLUU are still poised to triple.

    Happy New Year Everyone! :)

    April 2014 Update -- The article above was written in late December 2013. Let's see what GLUU did after all the insider selling started:

    (click to enlarge)

    As you can see, the stock went from $3.70 to $5.70, powered by an incredibly strong quarter. If you need any further proof that insider selling should be ignored, I can't help you ;)

    Now, all of that being said, notice that the stock hit the top-end of my risk/reward chart channel (the line above the stock). That was a signal to hedge your position (by selling calls, buying puts, or shorting the Russell) or take some profits off the table.

    The pullback that ensued was not a function of the insider selling (as discussed above), but rather the fact that the stock got high in its risk/reward channel at a time when the market was getting ready to pull back.

    Disclosure: I am long GLUU.

    Stocks: GLUU
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Comments (22)
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  • Mark Gomes
    , contributor
    Comments (1952) | Send Message
     
    Author’s reply » FYI, I donate my time to Seeking Alpha for free. It's my way of giving back to a world that has provided me with so much good fortune. If you appreciate my work, please visit my PTT Research video profile at http://bit.ly/16GHjpw

     

    Those who don't know me can also check out my complete track record at http://bit.ly/14zls2d

     

    Cheers!
    28 Dec 2013, 03:18 PM Reply Like
  • INV1
    , contributor
    Comments (93) | Send Message
     
    You did not have to post this for me. I bought some GLUU from
    your first mention.

     

    But thanks because I always get more info or places to go to get info
    (InsiderCow).

     

    Much thanks.
    28 Dec 2013, 03:29 PM Reply Like
  • calyard
    , contributor
    Comments (99) | Send Message
     
    i am long GLUU and just bought more on teh pull back.
    Thank you for taking the time to respond...now back to looking for more triples!
    28 Dec 2013, 05:58 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9035) | Send Message
     
    Nice update. Thanks, MG.
    28 Dec 2013, 08:09 PM Reply Like
  • Rabadaddy
    , contributor
    Comments (22) | Send Message
     
    Always appreciate Marks solid articles!!
    29 Dec 2013, 09:15 AM Reply Like
  • Aaron.Rhodes
    , contributor
    Comments (251) | Send Message
     
    Hey Mark,

     

    Don't think this article is a waste of time. It was very informative about this type of trade and online resources on how to track insider trades. While I enjoy finance, I simply don;t have the time to put my nose to the books and learn as much as I would like (my real passion is ecology). I appreciate concise and informative reviews of what experts think are important facets of a company's success.

     

    Cheers,
    Aaron
    29 Dec 2013, 10:51 PM Reply Like
  • Mark Gomes
    , contributor
    Comments (1952) | Send Message
     
    Author’s reply » Cheers Gentlemen. I appreciate the kudos.

     

    Happy New Year!

     

    Mark G.
    30 Dec 2013, 12:46 PM Reply Like
  • sdriscoll45
    , contributor
    Comments (65) | Send Message
     
    Still sticking with your take on this even with the seemingly non stop and scary insider dumping???? A lot more insider selling has taken place since this article of yours.....

     

    Hope this doesn't burn your followers like your take on ARCW did.
    11 Jan, 08:13 AM Reply Like
  • COBeeMan
    , contributor
    Comments (1341) | Send Message
     
    sdriscoll - Are you aware of what a 10b5-1 Plan is used for? How about a Form 144? These are not "insider dumping".
    11 Jan, 01:12 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9035) | Send Message
     
    Pretty rude comment...
    11 Jan, 01:16 PM Reply Like
  • sdriscoll45
    , contributor
    Comments (65) | Send Message
     
    Ashraf, I don't mean to be rude nor do I get anything from being rude....it's a simple question. And regarding ARCW, that's a fact - a lot of Mark's followers (including me) got quite badly hit. Where there is appreciation for the right picks, you gotta take the negative ones as well, don't you agree?
    11 Jan, 06:33 PM Reply Like
  • sdriscoll45
    , contributor
    Comments (65) | Send Message
     
    COBee, I was aware of what that is and in fact have been reading and learning more about it in the last couple of days. But nonetheless, the insider selling in this much of quantity and this often kind of is a cause of concern....I for one hope its not because I am definitly long on GLUU currently. There have been a lot lot more of these insider sellings on this since this article came out and hence was asking Mark if this causes any change in his take on this.
    11 Jan, 06:41 PM Reply Like
  • COBeeMan
    , contributor
    Comments (1341) | Send Message
     
    Steve - these sales were special circumstances and those that were 10b5-1's were planned way before the article came out (so your conclusion is wrong). As Mark has said on calls, "you're trying too hard." If you are actually a subscriber, you should be using "the methodology", using a minor percent of your portfolio on any one recommendation, and not worrying about short term events, especially this kind of special event. He's not going to get 100% right, no one is, but he'll do better than you! He will be the first to notify subscribers if he changes direction (re: your question), and using words like "insider dumping" incorrectly IS rude and misleading to other readers. Maybe using a SA message, instead of a post like this, would have been more appropriate...at least until you get the facts straight.
    11 Jan, 07:25 PM Reply Like
  • User 201806
    , contributor
    Comments (2) | Send Message
     
    Sdriscoll45,

     

    You need to put your big boy pants on.

     

    Mr. Gomes has written many articles on the site that can give you insight into how his picks perform and how his investing methodology works. From his past responses to the same question you could pretty much tell he would say that his perspective on glu hasn't changed from this new insider selling information.

     

    If you we're burned it was because you didn't do as cobeeman already mentioned; properly allocate your portfolio. Do yourself a favor and read more of Mr. Gomes articles to better understand his approach and methodology before investing in his next pick. (Clearly you didn't before you made a trade in arcw)

     

    Don't flame him just because you lost money in an idea he shared. It's not like he is telling you to buy the next hot OTC stock. It should be clear by now from his record that he is a credible contributor to the site.

     

    As for glu, if you can't take the risk of the insider selling having real merits, then sell all or trim your position. Just don't complain later if it turns out to be nothing. The information he is giving you on seeking alpha in this article is free. It is ultimately up to you how to best trade on that information provided.

     

    Good luck and best wishes.
    13 Jan, 10:25 AM Reply Like
  • Andrea Rossi
    , contributor
    Comments (8) | Send Message
     
    Very convincing ! No fear to have of insider's selling and trust in the monetization plateform. That really makes sense. Thank you Mark !
    1 Feb, 12:41 PM Reply Like
  • Mark Gomes
    , contributor
    Comments (1952) | Send Message
     
    Author’s reply » As you can see, the stock is up about 10% since I wrote this, while the market has fallen. ;^)
    2 Feb, 11:26 AM Reply Like
  • Mark Gomes
    , contributor
    Comments (1952) | Send Message
     
    Author’s reply » I updated this article today.

     

    At GLUU's peak, it rose 55% in the 2 1/2 months after I wrote this (in the midst of the "insider selling").

     

    As of today, the stock has come down A LOT but has STILL outperformed the Russell by 15% in the 3 1/2 months since I wrote this article. That's 61.5% annualized!

     

    Generally, a stock with GLUU's beta (which is 2.3) would be DOWN 10%. Instead it is UP 10%. The difference is called "alpha"...and that is what we are all "seeking" :)

     

    I've been doing this for over 25 years and learned this particular lesson via the teachings of the legendary Peter Lynch in the mid-90s.

     

    Just remember, when a stock is down (or falling) investors' FEAR leads them to seek a reason for the decline, which only causes them to falsely "justify" their fear (and probably sell at just the wrong time).

     

    Insiders often have most of their wealth tied up in their company's stock. It is WISE for them to DIVERSIFY their wealth (even if they believe in their company 100%). The only way for them to do that is to sell shares of their company's stock. It is right. It is just. It is NORMAL.

     

    In short...ALWAYS ignore insider selling. If there's something wrong with your company/stock, find out what's wrong. Insider selling isn't the answer.
    14 Apr, 10:32 PM Reply Like
  • sdriscoll45
    , contributor
    Comments (65) | Send Message
     
    "The pullback that ensued was not a function of the insider selling (as discussed above), but rather the fact that the stock got high in its risk/reward channel at a time when the market was getting ready to pull back."

     

    As stated in my other comment, you stated at that time that your risk/reward channel showed a support of $6+ levels and NOT that it got high as you claim to have stated.... This is in stark contrast to what you had stated.

     

    Even if you were to have stated back then, as you mention above (which did not happen)- it got high on your risk/reward channel and it got promoted to GOldMine around the same time.... How does that happen? That's a major gap right there....according to your own methodology, that reflects more of a 'wait time' category?

     

    Thanks.
    15 Apr, 11:58 AM Reply Like
  • Mark Gomes
    , contributor
    Comments (1952) | Send Message
     
    Author’s reply » SD,

     

    I understand your frustration. I'm frustrated too. It's a justifiable reaction to declining capital value. Nonetheless, GLUU is down because of a market correction and the actions of short-term traders.

     

    The chart DOES support a $6 price...it just hasn't gotten there. You may be confusing the words "chart can support $6 by Apr 11" with "stock will go to $6 by Apr 11".

     

    As I've said many times before, I NEVER (EVER) predict where a stock will go in a specific timeframe because I can NEVER (http://bit.ly/1jIfnXj) predict what the total population of market participants will do next. Unfortunately, I have to deal with a backlash every time the market hiccups (without commensurate apologies when things eventually work out, as they usually do).

     

    Also, "Gold Mine" doesn't mean the stock will go straight up. It means that the company has figured out a winning formula for producing sustainable growth...and GLUU has, so it is a Gold Mine, regardless of what the stock does today. The stock will go up and down. Its quarters will be up and down. Just like any other great company. The key is the growth it delivers over the next couple of YEARS.

     

    THAT is the Methodology that has earned me close to 40% annually for the past 18 years. It's boring and requires a LOT of patience (and faith), but it's effective. I fault no man who decides that this Methodology is not for him.

     

    I hope that didn't come across harshly. I'm just responding to your question as best I can. You have my respect, as always. In fact, I'm going to incorporate some of this into my updated Methodology. It's important stuff for all investors to understand. Cheers!

     

    Kindest Regards,

     

    Mark G.
    15 Apr, 12:52 PM Reply Like
  • ManiakTT
    , contributor
    Comments (87) | Send Message
     
    Hello, Nada Hany sold the stock at the highs, the last time he did that, the stock begun to fall, I think you have to follow him when he buys you buy and vice versa.
    15 Apr, 02:37 PM Reply Like
  • ManiakTT
    , contributor
    Comments (87) | Send Message
     
    Look at this:
    http://seekingalpha.co...
    15 Apr, 02:38 PM Reply Like
  • COBeeMan
    , contributor
    Comments (1341) | Send Message
     
    ManiakTT - I think that is good advice for traders looking to buy and sell multiple times in year. Hany Nada has been selling little bits here and there (indirectly) since around Christmas around $4 and then around $5 right after that pop caused a gap. However, it looks to me like he is doing minor profit taking after pops, and is not selling out like you imply. I'll bet he is buying back in as soon as this market-wide down trend reverses!
    15 Apr, 04:52 PM Reply Like
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