Täna kirjutab Barrons Insider Scoopis WCI Communicationist (WCI), kuhu on end lisaks insaideritele sisse ostnud ka Bill & Melinda Gates Fund ning Carl Icahni investeerimisfirma Icahn Management.
WCI COMMUNITIES STOCK has become a battleground between bullish billionaires and a bearish Street as insiders and institutional players purchased shares despite analysts' bleak assessments of the Florida home builder.
On Monday, Charles Cobb Jr., a WCI director since 2005, spent $1.56 million to purchase 100,000 shares in the open market, according to yesterday's Security and Exchange Commission filing.
The day after Cobb's purchase, the Bill & Melinda Gates Foundation Trust and Carl Icahn's investment firm, Icahn Management, each disclosed initial stakes in the company, according to their third-quarter filings with the SEC Tuesday.
Cobb's only other open-market purchase took place a year ago. Cobb now beneficially owns 120,000 shares. There are 41.85 million outstanding WCI shares.
Cobb is also the chief executive of Cobb Partners, a Coral Gables, Fla.-based investment firm. He previously served as a U.S. ambassador to Iceland under George H.W. Bush and as undersecretary and assistant secretary at the U.S. Department of Commerce under the Reagan administration.
Ben Silverman, director of research at InsiderScore.com, says, "The sentiment toward the company is extremely bearish," given concerns over the housing market and about WCI's level of debt. But Cobb's "timing proved very good" in light of initial holdings disclosed by two heavy hitters.
WCI shares have popped as much as 20% since the disclosures, but they are still down 31% this year. The Dow Jones U.S. Home Construction Index is down 26%.
As of Sept. 30, the foundation led by Microsoft founder Bill Gates and his wife Melinda reported it purchased 887,000 shares valued at nearly $15.5 million. The entity's equity assets rose to about $6.2 billion in 62 positions during the third quarter from $4 billion held in 52 stocks in the previous quarter. The foundation has earned an average return of 8.53% per year since 1999.
Icahn Management acquired 1.66 million WCI shares valued at $28.95 million during the third quarter.
Specific transaction prices and dates regarding the Gates and Icahn transactions were not disclosed because their holdings fall shy of the 5% ownership level requiring such disclosure.
WCI stock fell from a high of around $20 during the third quarter to a one-year low of $13.73.
InsiderScore.com's Silverman says, "The interesting thing is you have two billionaires buying the stock at the same time when home builders have obviously been beaten down, and you have one director who's got a great background."
Jonathan Moreland, director of research at InsiderInsights.com, says that considering the timing of Cobb's transaction, "I think investors could be forgiven for wondering whether or not he knew about these other purchases."
"What is certain is that Cobb has to hold these shares for six months," he adds.
WCI builds luxury homes and condominiums, mainly in Florida. In its third-quarter report on Nov. 7, the company noted an uptick in consumer defaults and contract cancellations at twice the historic rates. Despite earnings deterioration, the company expects to earn $1 to $2 per share in fiscal 2007, which analysts are saying is still too optimistic.
So, on one side, Cobb and the two large investors are siding with the company's outlook while "on the other side you have [sell-side] analysts who are extremely bearish on the name," says Silverman. "There is a bear-bull battle going around with the stock."
Silverman says the Street seems to be discounting potential activism by another major holder.
Basswood Partners, a value-oriented hedge fund based in New York, last month disclosed a 5.1% stake in WCI with 2.1 million shares, costing more than $42.5 million. Basswood has sent two unreturned requests to WCI seeking a board seat. Undaunted, the fund said it may seek to push for operational changes or a sale of the company.