Watching insiders is like participating in a weeks-long stakeout. You expect something to happen, but you don't know what. So you settle in, sip your coffee, and wait for clues to solving the big case.
Here, the "case" is direction: Which way is your stock headed? The "clues" come in the form of insider buying and selling action. Have a look at Yahoo! (Nasdaq: YHOO) over the past year.
| Insider Rating | Bearish |
| Business Description | An early pioneer in Web search, Yahoo! may have already seen its best days, at least in many investors' opinions. |
| Recent Price | $14.93 |
| CAPS Stars (out of 5) | ** |
| Percentage of Shares Owned by Insiders | 9.34% |
| Net Buying (Selling)* | $66.9 million |
| Last Buyer (% Increase) | John Chapple, director |
| Last Seller (% Decrease) | Michael John Callahan, EVP and general counsel |
| Competitors | Google (Nasdaq: GOOG) |
| CAPS Members Bullish on YHOO Also Bullish on | Apple (Nasdaq: AAPL) |
| CAPS Members Bearish on YHOO Also Bearish on | Microsoft (Nasdaq: MSFT) |
| Recent Foolish Coverage of YHOO | The Next Leap Forward in Search |
Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. (Data current as of Aug. 28.)
*Open market sales and purchases only.
What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times, they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.
Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.
The Foolish view: Bearish
CAPS investors have been skeptical of Yahoo! for a while now, granting the search laggard just two out of five stars over the past year. I've been a skeptic, too. When my editors asked which stock I'd name the most frightening for last year's Halloween special, I chose Yahoo!.
I'm not alone. Investors seem to think of Yahoo! as they do eBay (Nasdaq: EBAY) or Overstock.com (Nasdaq: OSTK): once-sexy dot com businesses that have long since lost their sizzle. This is especially true of Yahoo!, which may as well have gutted itself when it asked Microsoft and Bing to take over the heavy lifting in its search business.
Social search is still a possibility, sure, but few Fools seem confident. "If it wasn't for Yahoo! Finance I would have forgotten all about them," wrote CAPS investor sempire in a bearish pitch from earlier this month. "Sure, Yahoo! was great in the 90's, and Yahoo! mail was a great solution to Hotmail, but now is Yahoo! even relevant?"
No Yahoo! insider would ever say that about their business. Not on the record, at least. Nevertheless, the action looks very bearish to me. Carl Icahn was responsible for the vast majority of the buying, and at prices lower than we're seeing today. The sellers, meanwhile, have also sold at lower prices than we're seeing today, a combination that suggests lower prices are still ahead.
But that's also just my take. Do you agree? Disagree? Log into CAPS today and tell us how you would rate Yahoo!.
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