Bear Stearns tracks insiders when they buy/sell shares

Oct 15, 2002 6:30 AM

   In an equity research paper issued last week, Jason Ader, chief gaming analyst at Bear Stearns and his assistant, Christa Short, “revisited” the share buying and selling activity of gaming company insiders and found three major trades.

   The first, and easily the largest in dollar volume, involved Glenn Schaeffer, president and CEO of Mandalay Resort Group (MBG). Schaeffer sold 733,333 shares earlier this month, generating $24 million. On Aug. 2, as reported previously in GamingToday, Tom Gallagher, president and CEO of Park Place Entertainment Corp. (PPE) picked up 25,000 shares of his company at a cost of $175,000.

   But, the most persistent insider has to be media mogul Sumner Redstone who has been a strong supporter of WMS Industries (WMS) for several years and remains so. Despite having had to give his ex-wife three million shares from his stockpile, Redstone still remains the company’s single largest shareholder with nearly seven million shares in his portfolio.

   The only two casino executives who individually own more than half the outstanding shares in their companies are Craig Neilson, founder and chairman/CEO of Ameristar Casinos Inc. (ASCA), who owns more than 15 million shares, or nearly 60% of the company’s shares, and Kirk Kerkorian whose MGM MIRAGE Inc. (MGG) holdings amount to nearly 82 million shares or 50.97% of the company.

   In his report, Ader remarked that “While we acknowledge that there are numerous reasons why insiders sell shares, we believe that overall, they are good traders in their own shares. In our view, when coupled with an attractive valuation, these insider purchases are a positive signal to the market. In contrast, we believe that sharp increases in insider sales is a relatively bearish sign.”