LPM: Red Hat

[David Pitts]

I don't know if any of you follow the stock market.  I also don't know if any of you follow Red Hat.  If you do, you know that Red Hat has taken a dive this year, opening at around 102 and sitting today at around 31.  Well, I did some investigating and here is what I found:


      Transaction Date Name Action Shares Price Value Type D/I* Remaining Shares 
      03/23/00 IBM Corporation
      Shareholder Planned Sale  250,000 -  14,375,000  - - - 
      03/07/00 Oracle Corp.
      Shareholder Planned Sale  164,717 -  10,000,000  - - - 
      02/25/00 Itel Corp
      Shareholder Planned Sale  50,000 -  3,412,500  - - - 


For those of you that don't understand it, this means that Red Hat's three biggest corporate sponsors now own no part of Red Hat.  All three have sold their shares.  Granted, they were planned sales.  In addition, if you look at the buying and selling trend of the top people of the company, you find:

      02/09/00 Young, Robert F.
      Director Sale  160,751 90.73  14,584,938  com D 7,721,089 
      02/09/00 Young, Robert F.
      Director Non-Open Market Sale  160,751 90.73  14,584,938  com I 10,121,061 
      02/09/00 Young, Robert F.
      Director Sale  160,751 90.73  14,584,938  com D 7,721,089 
      02/09/00 Young, Robert F.
      Director Non-Open Market Sale  160,751 90.73  14,584,938  com I 10,121,061 
      02/09/00 Ewing, Marc
      Director Sale  331,745 90.73  30,099,223  com D 15,435,767 
      02/09/00 Ewing, Marc
      Director Sale  331,745 90.73  30,099,223  com D 15,435,767 
      02/09/00 George, Manoj
      Chief Financial Officer Sale  7,998 90.73  725,658  com D 430,206 
      02/09/00 George, Manoj
      Chief Financial Officer Sale  7,998 90.73  725,658  com D 430,206 
      02/09/00 Batten, Frank(grat98)
      Beneficial Owner (10% Or More) Sale  25,000 90.73  2,268,250  com D 26,948,284 
      02/09/00 Batten, Frank(grat98)
      Beneficial Owner (10% Or More) Sale  25,000 90.73  2,268,250  com D 26,948,284 
      02/09/00 Shumannfang, David
      Secretary Sale  2,190 90.73  198,698  com D 117,810 
      02/09/00 Shumannfang, David
      Secretary Sale  2,190 90.73  198,698  com D 117,810 
      02/09/00 Batten, Frank Jr.
      Beneficial Owner (10% Or More) Sale  25,000 90.73  2,268,250  com I 26,948,284 
      02/09/00 Batten, Frank Jr.
      Beneficial Owner (10% Or More) Sale  25,000 90.73  2,268,250  com I 26,948,284 
      02/09/00 Young, Nancy R.
      Beneficial Owner (10% Or More) Sale  160,751 95.00  15,271,345  com D 6,884,741 
      02/09/00 Young, Nancy R.
      Beneficial Owner (10% Or More) Non-Open Market Sale  160,751 95.00  15,271,345  com I 10,957,409 
      02/09/00 Young, Nancy R.
      Beneficial Owner (10% Or More) Sale  160,751 95.00  15,271,345  com D 6,884,741 
      02/09/00 Young, Nancy R.
      Beneficial Owner (10% Or More) Non-Open Market Sale  160,751 95.00  15,271,345  com I 10,957,409 
      02/09/00 Szulik, Matthew J.
      President Sale  38,826 90.73  3,522,682  com D 2,016,530 
      02/09/00 Szulik, Matthew J.
      President Sale  38,826 90.73  3,522,682  com D 2,016,530 



Now, at first glance, this may seem bad with everyone and their mother selling off shares, but let me spin a slightly different tale.  They all had to hold on to the stocks for six months.  They could not sale before 2/9/00.  They are all (and the list is much longer, I shortened it for brevity) trying to cash in on their investment before the bottom completely dropped out.  

My advice, look for other companies that have IPO'd recently to do the same, pull out before the 6 month date (although I would say the 5 month date), and watch the stocks fall through the floor.  When they hit rock bottom (which for rhat will be around 16 dollars a share - my prediction), then it will be time to invest again.


Thanks,

David
David Pitts
President, Pitts Technical Resources, Inc.
(859) 552-3262
www.dpitts.com
dpitts at mk.net
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