INSIDE TRACK: Higher One Holdings Leaders Sell Shares
2011年6月9日 - 3:06AM
Dow Jones News
Top executives at Higher One Holdings Inc. (ONE) are looking to
reduce their stakes after more than a decade building up the
financial-aid processing company.
In mid-May, nearly a year after the company went public, six
insiders sold 667,616 shares valued at more than $10 million. They
made the moves in accordance with stock-sale plans disclosed in
March. However, the sales came with share prices more than 30% off
their $21.97 peak in December, around the time a share lockup
expired, and almost 20% below the mid-February price when an
earnings blackout concluded.
These sales, conducted from May 9 through May 17, were made at
prices averaging between $14.84 and $15.32.
"They missed the opportunity in December," said Ben Silverman,
director of research at Insiderscore.com. By selling in May
instead, "It's sort of like they've accepted this valuation. These
guys aren't waiting for that [rebound] to happen."
Director Paul Biddelman, whose 500,000-share sale comprised the
bulk of May's insider moves, said he wanted the market to "settle
in" before he took action. "IPOs tend to be volatile and we didn't
want to contribute to that volatility," said Biddelman, whose
Hanseatic Corp. invested in Higher One in 2002. Biddelman said the
market is now "settled into a trading range."
New Haven, Conn.-based Higher One, which disburses financial aid
to students on behalf of colleges, offers checking accounts that
allows families to pay school bills online, has grown rapidly as
schools look to cut costs and more students receive loans and
grants. The 11-year-old company boasts a strong new-customer
pipeline, high client retention and increased opportunities for
cross-selling new products.
Still, competition is heating up from companies such as SLM
Corp. (SLM) and Blackboard Inc. (BBBB), and regulatory changes may
pressure Higher One's fee structure.
For now, Wall Street analysts remain bullish on prospects for
further growth. Seven of eight analysts that cover the stock giving
it a buy rating or equivalent; the eighth recommends a sell. They
have an average price target of $21.38, according to FactSet.
Higher One spokeswoman Shoba Lemoine said the insiders began
their stock sales "to slowly diversify their holdings in measured
installments over a multi-year period."
Lemoine said the insiders didn't begin to sell earlier because
the IPO-related lockup expired on Dec. 13, at the beginning of an
earnings blackout period. That blackout starts three weeks before
the quarter ends, with sales reopening two days after results are
reported. Fourth-quarter earnings were released Feb. 15.
Chief Operations Officer Miles Lasater, Chief Service Officer
Case McGuane and Chief Sales Officer Robert Reach all entered
10b5-1 stock-sale plans in March, with sales allowed after the May
3 earnings report. Chief Executive Dean Hatton announced in March
that he would exercise and sell a number of options before they
expire, also beginning after the earnings release.
Directors Patrick McFadden and Biddelman had no such agreements
this spring.
Hatton, McGuane and McFadden exercised options valued at 14
cents to 32 cents, and then sold the stock. The others sold stock
outright.
According to the March securities filing, even if the 10b5-1
plans are maxed out, the insiders' net worth would remain
concentrated in company stock. "The management team remains
committed to the company's long-term success," the filing said.
Lasater's stock-sale plan provided for sales only when the stock
traded above a certain price, according to the filing. The
threshold at which the 10b5-1 plan can be triggered seems "pretty
low," Silverman said, and not a great sign of confidence.
Michael Taiano, an analyst with Sandler O'Neill + Partners and
the only one with a sell rating on Higher One, said the insiders'
moves may be prescient. Competition, pricing pressure and a
potential slowdown in financial aid awards threaten to slow down
the company's meteoric run, he said. While client signings and
revenue won't deteriorate immediately, Taiano fears company
executives are too dismissive of potential challenges.
"This is more of a longer term structural breakdown," said
Taiano, who has a $13 price target on the company.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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