Oracle to buyback $17 billion in stock
Today, Oracle announced a plan to buyback $8 billion worth of stock in addition to an existing plan to buyback $9.3 billion of stock.
No timeline was given for the $17 billion deal and shares of Oracle rose 6.7 percent today. Trading activity was pretty normal, just about 400,000 shares above the three-month average of 42.1 million shares per day.
I must admit, news of this nearly doubled buyback shocked me a bit. In today’s market, where everyone is hoarding cash, here comes Oracle announcing a huge deal to buyback common stock. If the board believed the stock was overvalued they wouldn’t buy it back and if the company is willing to take a cash hit of $17.3 billion in this market, they must know something we don’t know. It would seem as if the insiders are giving investors the green light. But, what are the insiders doing with their own money?
Well, I decided to see what the insiders are up to and according to yahoo, for the past six months they have been doing nothing but selling! I saw a total of 26 transactions, 26 sales and zero purchases. In fact, the top dogs have unloaded over 3.73 million shares.
Looks like the green light just turned yellow.
Digging a little bit deeper, I found an article which suggested that some Oracle insiders pledged their shares in the firm as collateral for margin accounts. So, perhaps many of their sales had little to do with the value of Oracle’s shares and more to do with the dwindling value of their individual portfolios. When the margin calls came, they had to sell something and I guess that something was Oracle.
Regardless of the mixed signals, Oracle has weathered the recent economic crisis better than most stocks. In the past year, shares of Oracle have fallen about 14 percent, which is very good considering the fact that the S&P 500 has lost 34 percent over the same period.
Wonder if we can trust the insiders to manage Oracle’s investments better than they manage their own?
Tags: buyback, oracleRelated Stories
POSTED IN: Corporate, Investment, Market, News, Technology
1 opinion for Oracle to buyback $17 billion in stock
Gwen Webster
Oct 22, 2008 at 11:08 am
Tisa,
I am not used to the blogging scene…
Thanks for the information on Oracle…happen to have some shares, did quite well with during the late nineties and early 2000’s…will start watching this closely…maybe there is a windfall there for some of us.
Smooches,
Gwen
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