Signal_or_noise
Spinoff & Reorg Profiles’ latest report has a very interesting section on Insider Buying, and we asked for and got Bill Mitchell’s permission to post an excerpt here. Using Sharps Compliance (ticker SMED) as an example, this section of the report discusses when “incentive stock option exercises may act as an insider signal”. Item #5 in his summary (the last paragraph) is vital, as insiders are only human and can get carried away with frothy valuations just like the rest of the market. No matter how powerful one or even a combination of “signals” may seem, there must be “fundamental value” / margin of safety.
“Irony”: High-level corporate strategy consultants need to review their business models to survive. The Financial Times article may be just a sign of worldwide corporate spending cuts, so don’t read too much into it, but the fact remains that the downturn is driving consolidation in what is already a relatively concentrated market (useful chart in the story).
Quick tidbits inside from e-bit’s report about the state of the Brazilian e-commerce market in 2009 – Webshoppers, 21st edition (in portuguese and in PDF). We will discuss one company’s specific performance in regards to these numbers in our upcoming Q1 2010 report, but we wanted to highlight a few general data points in advance.
Now that the U.S. Healthcare bill has passed and just been signed into law, it’s interesting to notice the amount of noise generated in the past two days. Newspaper and sell-side reports are booming with articles and so-called analysis of what this means to investors, but right now it’s probably better to “do something by doing nothing”.
The investment mood is definitely optimistic and Merrill Lynch’s January 2010 fund manager survey is as good an indication as any: low cash balances, increasing exposure to equities, increasing appetite for risk. Some numbers are back to pre-crisis levels. As we point out in our Q4 2009 report (English version in the works), it’s hard to expect two consecutive years of out-sized returns and we’re prepared for a less ideal 2010.