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 中信泰富外汇交易巨亏 |
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blame it on hedge fund liquidation -- moneymaker - (174 Byte) 2008-10-22 周三, 23:30 (262 reads) |
ceo/cfo
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作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
greedy than being cautious!!! What risk management?? Never heard of it. 
ZT,
A SLEW OF MARGIN CALLS HAVE forced many executives to sell off big chunks of their stock, sending a shudder through the stock markets lately.
And as surprising as some of these sales were, there's potential for more of them.
At least 80 companies have insiders that have pledged stock as collateral for loans, according to a recent report by InsiderScore.com. Companies with a sizeable percentage of outstanding shares pledged as collateral include Danaher (ticker: DHR), Fossil (FOSL), Pulte Homes (PHM), Oracle (ORCL) and Campbell Soup (CPB) (See Chart).
A Selection of Companies with Insider Margin Exposure
Company % of Outstanding Shares Pledged as Collateral
Danaher 21%
Fossil 18%
Pulte Homes 12%
Oracle 8.6%
Campbell Soup 8.2%
Source: InsiderScore.comSuch margin exposure puts companies at the whim of a volatile market. Since Oct. 1, market conditions have forced insiders at 30 companies to sell a total of $1.2 billion in stock, according to InsiderScore.com.
"It appears to be a fairly new phenomenon over the past year to 18 months, where senior executives are holding stock in a margin account and their sales are not self-motivated and are not part of a trading plan," says Jacob Frenkel, a former SEC enforcement lawyer who is now an attorney at Maryland firm Shulman Rogers.
Two weeks ago, such market pressure forced Chesapeake Energy (CHK) Chairman and Chief Executive Officer Aubrey McClendon to nearly liquidate his 5.5% stake in the natural gas exploration company. Amid the tumbling market, McClendon sold a staggering $570 million in stock, a stake worth over $2 billion in July.
"These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis," McClendon said in a statement following the transaction.
Forced sales have longterm implications for companies, in addition to any selling pressure the margin calls create.
"Some insiders are being stripped of their ownership, which in our opinion weakens corporate governance," says Ben Silverman, director of research at InsiderScore.
Further stock weakness could still trigger sales elsewhere.
At software giant Oracle, for instance, CEO Larry Ellison has pledged 442 million of his company shares as collateral "to secure certain personal indebtedness, including various lines of credit." The pledge amounts to 8.5% of outstanding shares, or $8 billion worth of stock.
Thanks to a 2006 rule change by the Securities and Exchange Commission, companies are required to disclose an annual snapshot of executive holdings pledged as collateral. The commission wrote that such shares "may be subject to material risk or contingencies that do not apply to other shares."
The rule provided an early hint of the margin exposure faced by McClendon at Chesapeake. A footnote in the company's April proxy said that $29 million shares were "held in bank or brokerage margin accounts or escrow accounts securing brokerage accounts." If that sounds vague, it is. "The kind of disclosure you would need to evaluate this doesn't really exist," says David Yermack, a finance professor at New York University.
In his postsale statement, McClendon indicated that he "frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company's strategy and assets."
That's information that could have proved useful to investors prior to the selloff, according to University of Michigan finance professor Nejat Seyhun. "Buying on margin means the top executive is especially enthusiastic because the gains and losses are going to be magnified," he says.
Still, Seyhun adds that the transactions raise reasonable questions, as well. "What sort of risk management would you predict him to have for the shareholders," he says, noting McClendon's significant loss of equity.
At Campbell Soup -- the presumed picture of stability in recessionary times -- two directors have pledged 31 million shares of company stock as collateral. That amounts to 8% of Campbell's outstanding shares and $1.1 billion in current market value.
John Furey, a Campbell vice president and the company's corporate secretary, notes that the stakes are only a portion of the directors' holdings, which easily exceed the company's 6,000-share ownership requirement. Furey said he did not know how or where the shares were pledged.
In fact, current disclosure requirements give investors little information on how insiders are pledging stock, whether to back the purchase of additional company stock or to diversify into other investments.
Such diversification would compromise the benefits of insider ownership, says Mark Reilly, a partner at 3C- Compensation Consulting Consortium in Chicago.
"Companies provide stock and longterm incentives so [executives] think about creating longterm value for the company," Reilly says. "When you pledge stock in a margin account as collateral, I think it takes from that focus."
Ron Mueller, a securities law partner at Gibson, Dunn & Crutcher, says he advises corporate boards to place limits on the amount of stock that insiders can use as collateral.
"The concern is if they are too heavily leveraged, then they may have conflicts or improper incentives affecting their conduct if the company stock starts to fall," he says.
作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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