Friday, May 04, 2007

Sirenza On Tear - Will It Hold

May 4, 2007
Tyler Savery

Sirenza Microdevices (SMDI) has been on a tear lately. The company is a popular derivative play for those that follow satellite radio because they manufacture antennas for satellite radio units. In the past three months, the company has seen it's stock price move from the mid 7's to a close of $11.27 on Friday.

The spike in price today was driven by a quarterly report that was well received by the street. After hours, the company disclosed that CFO Charles R. Bland exercised options for 140,000 shares at $1.58 per share. He then sold all 140,000 shares for prices between $8.25 to $10.25 each. The transaction was conducted under a prearranged 10b5-1 trading plan. This plan allows a company insider to arrange sales in advance for such transactions even if he comes into possession of material nonpublic information.

Those that follow satellite radio will likely remember the deal that brought Mel Karmazin to Sirius also triggered prearranged sales for Joe Clayton.

Stock sales by insiders are often misunderstood and carry a negative perception. Many simply see the sale, and never consider what type of sale it was. Readers who are invested in SMDI have done quite well lately, and should watch for market reaction to this sale on Monday. There are many who trade on technicals, and despite a good quarterly report, that $1.00 gap up will have many wondering if it will be filled. Whether the prearranged insider sale will trigger a reaction is unknown.

Disclosure - No Position at time of writing

5/04/2007 10:49:00 PM

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