Monday, November 21, 2005

All About the Benjamins: GLW Insiders Dump Stock

How unfortunate.

The same week we reiterate our buy on Corning (GLW), insiders at the glass maker decide to unload shares hand over fist.

"Unload" doesn't quite explain what happen.

Treating oneself to an early Christmas is more like it.

14 insiders at NY-based Corning sold $32 million dollars worth of stock last week.

You should recall how bullish we've been on Corning all year:
We maintain our $30 dollar price target on the stock. Corning is the company that brought you the lightbulb and now wants to redefine your living room experience. The short to long term catalyst here is obviously the flat panel/LCD television boom. Corning (GLW) produces the highest quality substrate glass in the business. Demand for flat panel glass is expected to triple over the next 5 years and Corning has the competition smoked to a crisp. Since CEO Jim Houghton was asked to come out of retirement and steer the telco back to profitability, Corning has become the world leader in next generation glass substrates for liquid crystal displays.
With all the heavy insider selling last week, we find the risk-reward relationship less attractive and are thus downgrading GLW.

It is our experience that heavy insider selling typically presages a (major) downturn in the price of a security.

Our note to clients also comes on the heels of a negative Barrons story that ran this weekend -- Corning may be one of many US companies hurt by the dollar's spike.

Corning gets 61% of its sales from outside the US.

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